Payment fraud entails the intent or actual act of misrepresentation to cause a gain to another party or a loss to the firm. This type of corporate fraud can happen from within the firm or outside. You must stay vigilant and protect your business from this threat. Here are three key types of payment fraud, and how you can prevent or minimize them.
1. Online Payment Fraud
Online payment fraud can happen in several ways, including through payment interception, phishing, and identity theft. Payment interception is when the fraudulent party takes over a payment process. Phishing is when scammers pose as your firm and get your customers’ details by offering them a link/email that looks just like yours. Identity theft is when scammers try to use the personal and banking information of someone else to make fraudulent transactions for their gain.
One of the best ways to avoid online payment fraud is by choosing the right online account verification technology. Account verification ensures the money goes to and comes from the right person or business. One such digital bank account verification tool is the one from reputed vendor Envestnet | Yodlee. Envestnet | Yodlee’s account verification system complies with all NACHA rules for screening online payments to deter fraud and verifies account information in real-time.
Along with this technology, you must also advise and educate your customers to only answer emails that legitimately come from your account.
2. Business Credit Card Fraud
One form of credit card fraud is via ‘card testing’. Here, fraudsters make several low-value purchases to check whether the stolen account details go through. If the transactions carry through, the scammer will eventually move on to much more expensive purchases and max out the credit card. Another way is when employees charge their personal expenses on a corporate credit card.
To prevent credit card fraud, stay alert to small transactions done in quick succession since this is usually a sign of card testing. Also, ensure you monitor your transactions and your own and employee credit card statements. Let employees know about your company’s policy about what constitutes personal or business expenses and what they can use their company credit card for.
3. Friendly Fraud
This type of fraud is when customers receive your product, but later falsely claim to not have received it. They then either ask for their money back or ask you to ship another item again. The scammer will then end up with a product they didn’t have to pay for, or two of the same products for the price of one.
To ensure this type of product doesn’t happen, monitor your shipments and ask for proof of delivery. It also makes sense to try and find out if this happens more than once with the same customer.
Follow the above tips to reduce your exposure to fraud and protect your business. Keep yourself updated with news and resources regarding payment and account security. By being proactive about identifying potential weak areas and strengthening them, you can keep your business secure and your mind at ease.
