Take steps to protect against credit card ‘chargebacks’

There are many victims in credit card fraud, but McDonald’s owner/operators have a tool they can use to try to recoup money lost in the event someone claims their stolen credit card was used to purchase food at their restaurants.

The owner of the stolen credit card is not the only victim in this kind of theft. Business owners too can take a hit to the bottom line when they have to reimburse funds – called chargebacks – received from purchases with the ill-gotten cards.

While the new chip reader credit card machines have gone a long way toward protecting consumers and businesses from falling victim to credit card fraud, no system is 100 percent secure.

Through the Owners Risk Management Association, McDonald’s owner/operators have EMV insurance, called the EFT Guard program, that covers up to $10,000 in loss from chargebacks.

If an owner/operator is notified of a chargeback, he or she needs to fill out an EMV liability claim form (here) that includes the date of the counterfeit transaction and the dollar amount of that transaction. Be sure to complete and submit those forms as soon as possible or you run the risk of having your claim denied.

While it is not necessary that a store be equipped with what is called a “chip and pin” credit card system to obtain this insurance coverage, installing that equipment is highly advisable.

These chip reader credit card machines require that the card holder enter a personal identification number to complete the transaction when using a debit card. For credit cards, the customer must sign a receipt. The cashier and/or manager should validate that the signature on the receipt matches the signature on the back of the card. We suggest keeping signed receipts for a minimum of 13 months in an orderly and secure manner so they can easily be located if a retrieval request is made.

Since stolen credit cards are often used to purchase Arch cards, we also recommend the following safeguards be put into place:

  • Only allow a manager to sell Arch cards;
  • Check the customer’s driver’s license to make sure the name on the identification matches the name on the credit card;
  • Place a limit of $50 or $75 on the sale of Arch cards; and
  • If the customer does not have an ID or wants to purchase Arch cards in an amount that exceeds the maximum amount, direct the customer to McDonald’s website to purchase the Arch cards.

For more information about the EFT Guard program, click here. As always, please feel free call us if you have any questions.

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