Fraud is one of those terms no one likes to hear in business, but the reality is it exists, and it’s your job to put the correct measures in place to protect your business. Knowing where to start safeguarding your business can be the hardest part. The good news is awareness is the first step.
Familiarising yourself with the different types of business fraud will help you re-examine whether your existing practices need improvement or not. When it comes to fraud, there are certain types you should be aware of when protecting your business.
Three types of fraud to watch out for
Account Take-Over Fraud
From a financial perspective, one of the most significant risks a company can face is ‘Account Take-Over Fraud’. This type of fraud exists when someone gains access to a business account, sometimes through a compromised password, and then gains access to multiple business tools and applications.
An even higher risk exists if a business has used the same password for multiple accounts or platforms, thus enabling easy access for fraud. The difficulty with Account Take-Over Fraud is it’s not always clear that an account has been hacked and hackers can set up automatic rules on an inbox to filter out anything which may alert you to what they’re doing.
While online payment providers, like Pin Payments, may send you an email regarding unusual activity, if these filters are turned on, you won’t receive it and, therefore, won’t know your account has been compromised. From that point, hackers may trigger password resets to other accounts or access your business or personal bank accounts.
Money Forwarding Fraud
‘Money Forwarding Fraud’ is another type that has gained significant traction since COVID-19 and can leave your business financially liable for a hacker’s actions. Money Forwarding Fraud occurs when a scammer overpays for a transaction and then asks you to send some or all of it on to someone else. If you do so, and the transaction later turns out to be fake, you’ll be left with a chargeback for the full amount of the original transaction and additional chargeback fees. So when in doubt of the legitimacy of a financial transaction, do not forward any money.
Credit Card Fraud
Lastly, credit card fraud happens when a stolen credit card is used to pay for transactions. This is one of the most common run-of-the-mill scams and due to the increase in online shopping since the pandemic, many have encountered it. Despite this, more security measures are in place now than ever before to combat credit card fraud from as easily or readily happening.
It’s important to remember that fraud is a commercial enterprise for some people and, as such, the technology and practices they use are constantly improved upon and updated. Given this, it is paramount you stay up-to-date with the latest tools and publications, which will help you stay in the know about scams.
Tips For Safeguarding Your Small Business Against Scams
1. Have different passwords across all your business accounts
This may seem like an obvious tip, but many people use the same password or password variant across multiple accounts. In fact, according to a study by Google as many as 65% of people reuse the same password for multiple or all accounts. Despite how difficult it can be to remember passwords for all your business apps and accounts, doing so could save you thousands, not to mention the emotional stress of being hacked. Password managers, like 1Password or LastPass, can be a great solution to this problem.
2. Ensure you have two-factor verification enabled on all your accounts
Almost all financial or business tools now support two-factor verification, two independent inputs that confirm your identity, as a security measure for accounts. The first factor is invariably the humble password. The second factor is commonly a verification number provided via email, another platform or an authenticator app, which only you have access to. Pin Payments use two-step verification each time a customer logs into their account, with the code changing each time. Two-factor verification can (when used with an app or phone) ensure your account is protected in situations where your email account is compromised. For more information on why you should use two-step verification click here.
3. Watch out for any suspicious activity across all your business accounts
As a business owner, it’s important to carefully monitor all activity, transactions, and interactions. If you have an online store, keep an eye out for suspicious behaviours like repeat failed transaction attempts with assorted cards, unexpected order volumes for high-cost items, and purchases where the billing address is different to the delivery address. This type of activity can indicate attempts at fraud. Cross-check all transactions with a form of ID and ensure that all of the details including name, address, and credit card are correct. When there is doubt, Pin Payments provides one possible solution in easy card authentication (ECA). ECA allows merchants to verify a suspicious customer before shipping an order. You can find more information on how we use ECA here.
4. Keep on top of your security updates
At the end of the day, the most important thing you can do to protect your business is to ensure all of your security protocols, processes, and software are up-to-date. Make sure you regularly run software updates so you are utilising the latest technology and consider regularly updating or changing your passwords. Though this might seem extreme, these measures are in place to protect your data, financial security, and business. You can also stay up-to-date with the latest online scams through the Australian Government’s Australian Competition and Consumer Commission called Scam Watch.
For more information on fraud read our other article ‘Common Scams and How to Avoid Them’.