How to avoid payment fraud online

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15/03/2019

The Internet has made business transactions and financial management more convenient than ever before. However, the same technology that has opened so many doors for small businesses has also created new ways for talented criminals to take advantage of them.

Why your business is a target

Small business owners don’t always have strong cyber protection, perform proper background checks on employees, monitor smaller amounts of money being stolen over a longer time frame, or have systems in place to prevent fraud in the first place. Criminals are well aware of these flaws in small business operations.

What’s at risk?

Criminals don’t hesitate about accessing credit card information, passwords, and business banking details. Fortunately, there are steps you can take to ensure your small business can manoeuvre the financial realm of the Internet without becoming a victim of payment fraud. Simple attentiveness and a cautious eye are your best protections.

Types of payment fraud

There are several different kinds of payment fraud for the small business owner to be aware of. Knowing what you are up against is half the battle, and keeping informed of new ways that scam artists are operating is essential to your business’s well-being. After all, the Internet and its many financial uses are ever evolving. So are criminals’ tactics for stealing your hard-earned money.

Here are some of the main threats to be aware of:

Cheque fraud
Although there are many different ways that a criminal may commit cheque fraud, the most common methods rely on the ‘float’ technique. The float is the period between when the cheque is written and when it clears from the bank. A person writes several cheques in a short period, knowing there are insufficient funds to cover all of them. However, the float period doesn’t make the lack of funds obvious until the cheques begin bouncing.

Of course the easiest solution is to not accept cheques at all, and these are being used less and less.

Credit card fraud
Credit card fraud is the most common trend of theft to hit small business owners. The most common way credit cards are illegally obtained is through identity theft. This usually occurs when someone illegally uses another individual’s personal information to apply for a credit card. However, this can also occur on a business credit card account.

Counterfeiting
Counterfeiting is not a new way of committing payment fraud, but it can happen to you in many different ways. A person could attempt to pass fake notes cash and counterfeit cheques.

Scams
Small businesses also fall victim to other kinds of scams. For instance, a scammer may earn the business’s trust by making a small purchase and paying faithfully. Later, a larger order will be placed, but payment will never be seen.

Another common scam is having a credit card transaction either reversed or the card reported stolen after a customer places an order. The scam artist will pay the shipping deposit through their bank. Essentially, they get the product without paying more than shipping costs.

How to protect your business

Staying informed is your first line of defence against becoming a payment fraud victim. While some of the fraudulent methods criminals use to take advantage of your business are well known, there are always new criminal geniuses working on more creative ways to take your money.

Make sure to link to any fraud protection news feeds to stay on top of any new scams. The following suggestions will go a long way in protecting your company against fraudulent payment methods:

• Use secure online banking.
• Perform credit and security checks when necessary on customers.
• Accept advance payments only, or even better, payment in full.
• Educate your staff on common fraud techniques and how they can spot them.
• Allow only a select few employees to accept payments.

What to do if you’re a victim

Even the most vigilant business owners might find themselves victims of fraudulent customers. One way to help yourself now is to view this page on our website, which will explain how you can report fraud, or call us on 0800 345 7365.

Relevant examples of suspected fraud are phishing, identity fraud, email fraud, spyware, and text message fraud. Report suspected fraud involving your bank account by performing the following procedure:

• Tell your bank manager.
• Give a detailed explanation of the incident.
• Include or attach copies of received emails, anti-virus logs, or anti-spyware logs.

While all businesses are at risk of payment fraud, especially with the growth of online financial management, small business owners are likely to feel the pinch much worse than their larger counterparts.

As stated, cheque and credit card fraud are the two most popular scamming methods attacking small business owners. Criminals are finding new ways to target business owners each day, such as with recent mobile payment fraud. As it’s hard to catch many of them, they won’t stop trying, and you shouldn’t stop fighting.

Next steps

For more information review these sites;

• www.ukfinance.org.uk/ which has a range of useful content on finance and fraud.
• www.cyberaware.gov.uk/ that has content to help you protect your devices, data and business.
• If immediately serious you can report to the Metropolitan Police here.