Westfield Logo
Customer Agent Pay Bill: 800.766.9133 800.766.9133 More Options

Billing questions?
Call us Mon–Fri, 8a–8p EST


How to Prevent Credit Card Fraud at Restaurants

Plate of food on a table with an open wallet and a credit card sitting next to it

By Betsy Vereckey

Much to the chagrin of small businesses, credit card fraud is quickly on the rise. Last year, it was the most common type of identity theft, with more than 271,000 instances of credit card fraud, more than double what it was in 2017, according to data from the Federal Trade Commission.

Fortunately, there are proactive measures you can take to make it difficult for criminals to get away with their scams. Read on to learn how to prevent credit card fraud and what to do if you suspect it's happening at your business.

How can credit card fraud happen?

Fraud can happen regardless of whether a credit card is physically presented for a purchase.  Here are a few ways businesses experience fraud:


Sometimes at small businesses, such as a restaurant, customers hand over their credit cards, but they don't often see where their card goes. This leaves plenty of opportunities for a customer's credit card information to be stolen on a credit-card skimming device that reads the magnetic stripe on your credit or debit card. When inserted into a card reader by a dubious employee, the skimmer stores the card number, expiration date and cardholder's name.


Another way that fraud can happen is when hackers find their way into a business's point-of-sale (POS) system and infect it with malware that steals customers' credit card information. Widespread data breaches, while more common at bigger businesses, can still affect hundreds of millions of people.

Card-not-present fraud

Internet and phone transactions that do not require a customer to physically use their cards are classified as card-not-present transactions and growing in popularity. Card-not-present credit, debit and prepaid card fraud soared to $4.57 billion in 2016, up 34 percent from the year before, according to the most recent Federal Reserve Payments study. The future looks even bleaker—by one estimate, retailers stand to lose about $130 billion in revenue on fraudulent card-not-present transactions between now and 2023, according to a forecast from Juniper Research.

How can credit card fraud hurt your business?

The last thing you want as a small business is to damage your reputation. Even just one instance of fraud can reduce your customers' trust and lessen their chances of returning.

In addition, "chargebacks" (also known as transaction reversals) can add up for business owners and hurt their bottom line. When a person spots a transaction on their statement that they don't recognize, they can dispute the charge with their credit card company. This becomes a chargeback to the merchant, and an expensive one at that. While chargeback fees range between $20 and $100, companies often lose several times the transaction amount because of operational and customer acquisition costs, according to one estimate by security firm Chargeback Gurus. In 2015, these fees cost merchants a whopping $11.2 billion, according to a 2016 LexisNexis study.

How can you protect your business by preventing credit card fraud?

Run credit cards in plain sight

Moving your credit card machine to a transparent spot where customers can see the server run your transaction goes a long way to minimizing fraud. It's a lot harder for an employee or another perpetrator to illegally collect credit card numbers if the customer can see what an employee is doing with the card.

Double-check expensive or repeated orders

The Better Business Bureau says that a higher-than-normal bill could mean someone is using a stolen credit card to pay. Double-check that the customer's driver's license matches the credit card and the name on the receipt. Also, pay attention to whether there are multiple transactions on one card over a short period. Overall, be vigilant and scrutinize sales that look suspicious, the BBB says.

Insurance policy

Having cyber insurance coverage can cover plenty of fraud expenses, such as legal fees, in the event of a data breach, says the Cybersecurity & Infrastructure Security Agency. Another prevention option to consider: Hire a cybersecurity firm to carry out a penetration test of your business network and POS system to see how vulnerable you really are to an attack. It might be expensive upfront, but could save you money in the long run.

What should you do if you suspect a stolen card or identity theft?

  • If it's an online order, contact the person who allegedly made the purchase and make sure that they are the cardholder. If you can't reach them, delay the order until you can.
  • Contact the credit card merchant to make them aware of the unusual activity.
  • Report it to law enforcement. (Surprisingly, most businesses don't report fraud.)

While it's always important to offer your customers great service, keeping their identities and reputation safe is equally as crucial. They will appreciate your dedication to helping minimize instances of credit card fraud. And, remember, if you have your doubts, don't approve the sale.