Control the Tools of Crime

Preventing Credit Card Fraud Using Customer Photographs

To reduce problems with credit card fraud, Tops Alliance City, Inc., a major New Jersey-based retailer of consumer electronics and appliances, began to implement "Cardwatch" in two stores in 1993. Everyone applying for a Tops proprietary credit card had their pictures taken while they gave the clerk their credit histories. These pictures were stored in the computer and could be viewed at the electronic merchandise pick-up counters. When someone made a purchase on the proprietary credit card, the picture in the computer was compared to the customer.

The biggest fear was that customers would object to having their pictures taken. In fact, the legitimate customers appreciated it. Of the 67,456 applicants processed during the year of the study, there were only 19 refusals. Those who didn't want their pictures taken were probably trying to commit fraud.

This simple measure of taking pictures stopped people from applying for credit cards under someone else's name, because their pictures would be on file to provide evidence for police investigations. Also, it cut down by 45% on people making purchases, then later claiming that someone else had used their card. Overall, the annual losses from proprietary credit card fraud dropped an incredible 93%, from $189,083 to $19,643.

For more information about this case study, click here.

Does your business use proprietary credit cards, and could it do something like Tops? If you accept personal checks, could you also use a system like the one described here?

Click here for another New Jersey example of controlling the tools of crime.