As online transactions increase, so does the risk of credit card fraud. In fact, approximately 2.8 million consumers filed fraud reports with the Federal Trade Commission (FTC) in 2021, making it one of the most eventful years for credit card fraud to date.
Consumer concern for credit card fraud is also on the rise, especially as the holiday shopping season commences. In a 2022 survey, 73 percent of respondents said they were worried they will fall victim to a credit card scam.
While fear among consumers is certainly warranted, business leaders should perhaps be even warier of credit card fraud, as the associated risk is greater for businesses than it is for consumers. That’s because individuals are often protected against fraudulent purchases made on their credit cards, and businesses are left to cover the cost of those transactions. Personal credit cards are also covered by the Fair Credit Billing Act, while business credit cards are not.
Responsibility in Leadership
As a business leader, it’s your job to stay up to date on circulating scams and prepare your team on how to avoid them. This especially applies to e-commerce businesses, as email and phishing scams run rampant. In fact, 21 percent of participants in the 2022 survey reported being concerned about email credit card scams.
Email phishing scams use legitimate company information to send fraudulent links in an attempt to steal sensitive information. Scammers may even create fake social media profiles (sometimes even posing as business owners) targeting consumers to try and collect their private information. It’s in your best interest to be aware of these scamming attempts and protect your business from the consequences.
How To Prepare Your Team
Credit card scams can be tricky to catch, especially if you’re dealing with an experienced scammer. The best way to protect your business is through preventative action. Expand your knowledge of current scams and educate employees on the warning signs to ensure your business doesn’t become a victim in the first place.
- Educate yourself and your staff. If you don’t feel confident in your knowledge of credit card scams and how to spot and avoid them, your first step is to educate yourself. Read up on common types of fraud, focusing on those that are mostly likely to affect your industry. Next, educate your employees so you’re all on the same page. Some types of fraud to be aware of include card-not-present fraud, counterfeit fraud, lost or stolen card fraud, credit card cloning, and even employee fraud. Revisit this task regularly, as scams continue to evolve over time.
- Make staff aware of warning signs. It’s important for both you and your employees to be aware of scam warning signs so you can flag them before it’s too late. Some warning signs may include suspicious behavior if you operate a brick-and-mortar business, or things like irregular payment activity, extremely large orders, spelling errors on orders, or repeat inquiries about shipment and delivery dates if you operate online. Your staff should also be aware that certain purchases are at higher risk of fraud than others, like electronics, jewelry, and other luxury items.
- Limit company credit cards. While you probably (hopefully) trust your staff, employee fraud is actually quite common, so it’s a good idea to limit the number of employees who have access to company funds and other company financial information.
- Use fraud detection tools. There are many credit card fraud detection tools and technologies available, including CVV verification, velocity limits, geolocation, address verification services, and payment fraud detection software. A combination of these strategies will likely help reduce your business’s risk even further.
Fraud detection can be intimidating, but the extra effort to educate and prepare yourself and your staff may be well worth it if it means protecting your business.