‘Tis the season for holiday fraud – be prepared!
Don’t let Jack Fraud nip at your finances this holiday season. In 2019, there were 1.4 billion cases of fraud in the US, equaling $1.5 billion stolen. As of 2017, 1 in every 85 purchases is a fraud attempt. When you think about the amount of transactions you carry out during the holiday season, you could be facing multiple fraud attempts every single day. That’s why it’s critical for small business owners and employees to stay vigilant against all types of fraud, including credit card fraud, email scams and more.
Fraud techniques change often, and the volume of attempts will only continue to increase. Fraud leads to lost sales, lost merchandise and, most importantly, lost customer trust. As fraudsters get more creative, it’s up to small businesses to protect themselves and their customers. Therefore, we’ve prepared a list of tips and best practices to keep your small business protected.
Don’t overlook communication.
Communicate clearly and consistently with your customers so they know what kind of emails and information they should expect from you. A fraudster may impersonate your business by emailing your customers with malware, ransomware or phishing attempts. If a customer falls for this, they could become a victim of identity theft. And even though you’re not at fault, they may associate your business with the hassle and repercussions. If you communicate with your customer via email or texts, make sure your customers know what to expect and what to look for.
Likewise, you’ll want to be sure you’re communicating with your employees as well. They should know what communication is being sent to customers and what they should expect to see themselves. Make sure they’re following all best practices when it comes to accepting payments, answering messages on the company’s behalf and protecting sensitive information.
Understand “friendly fraud” and respond to disputes.
Consumers typically buy more during the holiday shopping season, and they‘re more likely to shop at stores they don’t normally visit the rest of the year. It’s easy to become confused by a purchase when they’re reviewing their bank or credit card statement. Sometimes, a customer will mistakenly report a transaction as fraud when it is a legitimate purchase – this is called “friendly fraud.” It’s best practice to respond to credit card companies and banks about disputes so you can avoid losing out on “friendly fraud” claims.
Tips to avoid credit card fraud:
Credit card fraud is one of the most prevalent types of fraud; it’s often the easiest to pull off and hardest to detect if your business isn’t prepared. Through September 2020, the United States has seen nearly 300,000 instances of credit card fraud alone. As a small business, fraudulent credit card purchases can lead to lost revenue and inventory, so be sure to follow these guidelines when accepting card payments:
- Perform “card present” transactions whenever possible.
- Make sure you can accept EMV chip cards and digital wallet payments at the point-of-sale. Modern point-of-sale devices, such as Clover, typically come with these options built-in.
- Use the latest technology to safeguard customer data.
- Use a secure payment gateway for online purchases.
- Make sure you’re PCI Compliant.
An in-depth look at some best practices for credit card acceptance can be found here.
Tips to avoid email fraud:
The COVID-19 pandemic has established email as the primary communication channel around the world. Concurrent with this change has been a surge in email fraud. Fraudsters have gotten even more creative with their attempts. Be sure you and your staff know these tips:
- Know the red flags.
- Never respond directly to an email you weren’t expecting.
- Don’t click on links within emails. Instead, go to the company’s website and navigate from there.
- Don’t use company computers for personal emails.
- Beware of fraudulent shipping notifications, as they can be used to collect private information or intercept your incoming or outgoing packages.
You should also ensure that your business is fully staffed during these busy months so you aren’t overextending employees or yourself. A stressed employee is more apt to overlook red flags or cut corners in order to get more work done. Make sure you’re giving yourself and your employees the resources and time to properly protect your business.
Using common sense will get you a long way this holiday season, but it never hurts to brush up on best practices.