Fraud is Now a Billion-Dollar Business – Are You At Risk?

The fraud of credit cards cost companies billions every year. The majority of the losses are incurred through online transactions. Merchants generally have the greatest stake in such cases – the customer has deemed the victim and may be able to have the fraud charges reversed. However, the bank does not pay the cost; sellers are held responsible.

As an owner of a business, it is your responsibility to would like to reduce the risk of fraud for your business. There are actions you can take to stop credit card fraud and also take steps to minimize the impact if you suspect or discover fraud.

What is fraud with credit cards?

Credit card fraud occurs in the act of stealing credit card details to make purchases that are not authorized. It’s considered a type of identity theft since the thieves use part of the credit cardholder’s information to commit the crime.

  • Here are a few ways that fraud with credit cards can be a problem.
  • Card-not-present (CNP) is when a fraudster steals an individual’s personal information and then uses it to make an online purchase.
  • The Account takeover (ATO) If someone is scammed and steals personal details, they may call companies that issue credit cards, pretending to be the person. They will then alter the PIN or password to ensure complete control over the account.
  • Skimmers are devices that steal credit card data on the back of a card. Hackers can offer the information they have gathered or use it for fraudulent purchases.

The fraud committed by credit card companies is quite frequent – in 2023 alone, more than 400000 Americans were the victims, as per the FTC. This number will only increase as more and more people are inclined to purchase online. However, electronic-commerce fraud rules might mistakenly refuse legitimate orders; using both manuals and automated fraud-screening strategies can protect your company and its customers from being victims of fraud-related crimes.

FYI: If you own an offline store upgrading your credit terminals to EMV is a simple way to decrease the likelihood of fraud with credit cards. The devices are based on safer chip transactions.

5 ways to avoid fraud

Everyone in the business, particularly those that depend on online credit card transactions, must take the threat of fraud very seriously and take measures to ensure that their business is secure for them and their customers. Let’s take a look at the five methods to prevent the theft of credit cards within your business.

1. Learn about the dangers.

As we’ve mentioned, credit card fraud can occur in various types, so the first step is to learn about the potential dangers. Learn about the most frequent kinds of fraud with credit cards and the warning indicators associated with the various types. Be aware of the following red flags:

  • The client purchases an unusually large amount of goods.
  • The billing and shipping addresses need to be in sync.
  • Multiple credit cards with an IP address are accepted.
  • The customer requests expedited delivery or has many questions about the speed at which it is possible to ship an item.

The customer can provide a fake email address.

Billion-Dollar Business
Billion-Dollar Business

2. Use fraud protection services.

It’s not possible to eliminate online fraud. However, having the right security measures will help reduce the risk. As an example, it is possible to verify your customers’ information by comparing it with databases maintained through Experian and Equifax. AVS is an address verification system (AVS) is the option which can in reducing fraud. AVS authenticates the cardholder by verifying the billing address with the address on account with the customer’s bank.

You may set your payment processor up to automatically flag or reject transactions over a specific amount. It is also possible to join forces with a merchant service provider that provides chargeback security. Check out our suggestions for the best merchant account options.

Tip: To keep your business’s sensitive data secure, Update your payment software whenever the software vendor permits. Inadequately updating your software exposes your company to vulnerabilities that fraudsters can exploit.

3. Data is the power source to make you more productive.

Another method to confirm shoppers identify themselves is by comparing the information provided to you with data that is publically accessible on social media sites like Facebook or LinkedIn. This technique is helpful since, while creating a new social media account using an unauthentic identity or name is simple, making one with a lengthy history takes a lot of work. Furthermore, the information you use is not necessarily the same as the name and contact information of the person they’re impersonating. Choose a risk analysis company that incorporates data from social media to offer an extra security layer.

Another method to use data to prevent fraud is to connect your customer’s data. This means connecting your customer data on marketing and customer service with your fraud information. By aligning these data sets, it is possible to use customers’ data to confirm details of purchases, decreasing the chance of false declines which incorrectly indicate a legitimate purchase.

4. Rely on your guts.

A typical financial fraud is when the scammer appears to be a potential customer. The person supposed to be the customer could come to your establishment and say they’d like payment for services upfront. The problem is that they’d like to include an additional amount which you’ll later make payment to a third-party subcontractor. For instance, they’d like you to give them $15,000 to develop their website, and they’ll need you to share their photographer’s $5,000 using the money. The person may be using the stolen credit card, and they’re asking you to transfer an amount of $5,000 directly to the bank before you realize that the $15,000 is a fraud.

While it’s difficult for online businesses to connect with their customers, they can establish a relationship with them regarding customer service and gain insight into the buying preferences of the customers they want to target. So, any unusual behavior and demands will be seen as being out of the ordinary. In the end, when a proposed payment transaction seems too good in its description, it most likely is.

5. Implement fraud prevention procedures. Now is the time to implement fraud procedures.

The risk of fraud with credit cards is inexplicably high. It is possible to experience no incidents for weeks, only to witness a sudden rise in suspicious activities. This is why it’s important to implement security measures as soon as possible and make regular security monitoring an integral part of your daily business processes. Do not look into the possibility of using risk management and payment services companies that can reduce the chance of being a victim of fraud since every day that passes is another chance for your company to be exposed.

Do you have any idea? The most reliable credit card processing firms, such as AVS Voice Authorization, provide anti-fraud software.

What can you do If there is a suspicion of fraud?

What happens you do if you have put all these steps in place, but your customers and your business remain victimized by fraud? If this happens, you must report the issue immediately to limit the damage and try to recuperate the money stolen. Contact your accounting team and bank as quickly as possible to inform them about the theft. It’s worthwhile contacting your processor for credit cards, too.

FYI: Although fraud in e-commerce is increasing, as is a scam from m-commerce which is the fraud of buying a mobile device. It is important to take precautions for your mobile application or store to minimize the chance of exposing your customers and business.

Inform the police in your area and provide them with a log of your interaction with the suspect fraudster. Not least, please make contact with any customers who have been affected to take the appropriate steps to safeguard themselves and retrieve their stolen money.

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