Credit card fraud has become a widespread problem in recent years, especially as online transactions increase. In fact, 2021 was one of the most eventful years for credit card fraud, with roughly 2.8 million consumers filing reports with the Federal Trade Commission (FTC).
And with the holiday shopping season approaching, consumer concern for credit card fraud is on the rise. In a 2022 survey, 73 percent of respondents said they are worried they’ll fall victim to a credit card scam at some point.
Credit card fraud can be just as damaging to businesses as it is to consumers — if not more. While consumers are often protected against fraudulent purchases made on their credit cards, businesses are left to cover the cost of those transactions. What’s more, personal credit cards are covered by the Fair Credit Billing Act, while business credit cards are not.
Social media, email and websites are areas of greater concern
The internet is ripe with opportunity for fraudulent activity. Half of the respondents in the 2022 survey said they’re worried about encountering credit card scams on websites or social media.
It’s certainly a legitimate concern, considering the great lengths scammers will go to get the information they’re after. For example, scammers create fake social media profiles (even posing as business owners) to target consumers and steal their private information. They may even use the name of a real company with a link to a fake website that prompts customers to enter their credit card or bank account numbers, Social Security number or other sensitive information.
Malicious emails and phishing scams are also used to steal personal data. In the same 2022 survey, 21 percent of participants reported being concerned about email credit card scams.
Email phishing scams may use legitimate company information (some even posing as real credit card companies) to send fraudulent links in an attempt to collect sensitive information.
How to safeguard your business
Credit card scams can be tricky to catch, especially if you’re dealing with an experienced scammer. Expanding your knowledge of circulating scams and being aware of the warning signs can help protect your business from becoming a victim.
Educate staff on types of fraud. It’s important for all employees to be aware of common types of fraud and their consequences for your business, including lost or stolen card fraud, card-not-present fraud, counterfeit fraud, credit card cloning, bot-driven account fraud and even employee fraud.
Make employees aware of warning signs. This may include suspicious behavior (if transaction is in person), irregular payment activity, extremely large orders, spelling errors on orders, repeat inquiries about shipment and delivery dates, etc. Staff should also be aware that certain purchases are higher risk than others, like jewelry, electronics and other luxury items.
Limit company credit cards. Employee fraud is much more common than you might think, so limit the number of employees who have access to company credit cards and other company financial information.
Use fraud detection tools. There are a variety of credit card fraud detection technologies and tools available, and a combination of these strategies may help reduce your risk even further. Tools include address verification services, CVV verification, geolocation, velocity limits and fraud detection software.
Bottom line
While it takes a bit of extra effort to implement these precautions, it will be well worth it if you can prevent credit card fraud from negatively affecting your business.
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