We formulate an oversampled radial basis function generated finite difference (RBF-FD) method to solve time-dependent nonlinear conservation laws. The analytic solutions of these problems are known to be discontinuous, which leads to occurrence of non-physical oscillations (Gibbs phenomenon) that pollute the numerical solutions and can make them unstable. We address these difficulties using a residual based artificial viscosity stabilization, where the residual of the conservation law indicates the approximate location of the shocks. The location is then used to locally apply an upwind viscosity term, which stabilizes the Gibbs phenomenon and does not smear the solution away from the shocks. The proposed method is numerically tested and proves to be robust and accurate when solving scalar conservation laws and systems of conservation laws, such as compressible Euler equations.