5 types of credit card fraud a small business should be aware of

November 13, 2019

Credit card fraud doesn’t discriminate. While many small businesses think they are too insignificant to be of interest to fraudsters, the exact opposite is true.

Security experts agree that small businesses are appealing targets precisely because of their size— and because they are less likely to put the necessary resources toward protecting themselves. That’s why it’s important to be aware of the most common card fraud scenarios and how you mitigate your risk.

Here are the top five types of credit card fraud:

  1. Wire fraud this occurs when a customer overpays for a large order and requests that the merchant wire the overpayment amount to them or someone else. But the sale does not go through and the merchant loses money.
    How to protect your business: Be wary of large orders, particularly from new customers. And never agree to wire money to anyone, even if the potential of a large sale depends on it.
  2. Force-auth fraud — in this scenario, a customer requests that the merchant force an authorization of their card when it’s declined by using a fake authorization code. This results in a chargeback for which the merchant is liable.
    How to protect your business: Don’t ever force a sale using a “code” from a customer, and always follow the usual steps for securely processing a transaction.
  3. Gift card fraud — gift cards are great for business but can be an easy target for fraud, such as when a customer returns stolen goods in exchange for a gift card.
    How to protect your business: Always require a receipt and a customer ID for returns, and have your return policies clearly posted at checkout and on receipts.
  4. Chargeback fraud — this occurs when a customer disputes a legitimate charge, resulting in a chargeback for the business. For example, a customer purchases an item, receives it, and then claims they either did not order it or never received it.
    How to protect your business: As mentioned previously, always keep customer receipts. Additionally, require signed delivery confirmation and provide clear billing descriptors and contact information.
  5. Online skimming fraud — in this scenario, hackers exploit unpatched weaknesses in the point of sale system, use malware to steal the data, and then sell the data for fraudulent purposes.
    How to protect your business: Implementing a multi-layered security solution like the Worldpay SaferPayments PCI DSS compliance programme, is your best defence against this type of fraud.

The impact of payment card fraud can be much more significant for small businesses that often don’t have the time and resources to deal with the fallout. A loss of even a few hundred pounds a month will have a much greater impact on a smaller business than a major retailer.

Don’t wait. Contact us to enquire about the tools, services, and professional guidance Worldpay from FIS offers that can help protect your small business from payment fraud.