At Beacon Payments, we help business owners protect themselves with secure payment solutions, clear policies, and smart practices. In this post, we’ll walk you through what causes fraud and chargebacks—and most importantly, how to reduce them.

What Is Credit Card Fraud?

Credit card fraud occurs when someone uses stolen card information to make a purchase. It can happen in person, online, or over the phone. In most cases, once the real cardholder discovers the charge, they file a chargeback—and the money is pulled from your account.

What Are Chargebacks?

A chargeback is when a customer disputes a transaction with their card issuer. If the bank rules in the customer’s favor, the funds are taken back from your business—often with added fees. Too many chargebacks can lead to higher processing fees or even the termination of your merchant account.

8 Ways to Reduce Credit Card Fraud and Chargebacks

1. Use EMV (Chip) Readers

If you're still using magstripe-only terminals, you're at a higher risk of fraud. EMV chip readers protect both you and your customers by adding a layer of security to every transaction.

2. Enable Address Verification Service (AVS)

For online or keyed-in payments, AVS verifies that the billing address entered matches the one on file with the cardholder’s bank. This helps prevent stolen card use and lowers fraud risk.

3. Require CVV Codes

The 3- or 4-digit CVV code on the back of the card proves the customer has the physical card in hand. It’s a simple but powerful way to catch fraudulent transactions before they happen.

4. Use a Clear, Recognizable Billing Descriptor

Many chargebacks happen because customers don’t recognize a charge. Make sure your business name appears clearly on their bank statement. If your legal name and store name differ, clarify it during the transaction or on the receipt.

5. Train Your Staff

If you run a retail or service-based business, train your staff to spot red flags—such as mismatched signatures, nervous behavior, or repeated declines—and follow your verification protocols.

6. Get Signatures or Written Authorization

Always collect a signed receipt, invoice, or written approval for large purchases, especially for phone or online orders. It helps you build a paper trail in case you need to fight a chargeback.

7. Have Clear Refund and Return Policies

Post your return policy at the register, on receipts, and your website. A clear, fair policy can reduce misunderstandings and prevent disputes that turn into chargebacks.

8. Use Secure Payment Gateways and POS Systems

Partner with a reputable processor (like Beacon Payments) that offers PCI-compliant technology, encryption, tokenization, and fraud tools like velocity checks and chargeback alerts

Final Thoughts

No business is immune to fraud or chargebacks—but with the right tools and best practices, you can dramatically reduce your risk and protect your revenue.

At Beacon Payments, we help businesses of all sizes implement secure, smart payment solutions designed to reduce fraud, fight chargebacks, and keep you in control of your cash flow.

Need help setting up a secure payment system or reviewing your current chargeback rate?
Contact Beacon Payments today for a free consultation and chargeback analysis.