What types of credit card fraud should small business owners be aware of? | Mint

What types of credit card fraud should small business owners be aware of? | Mint

Source: Live Mint

Starting a new business is not easy. It requires a great idea and sufficient finances. Even if you manage both, there are chances of fraud. However, there are many means through which you can avoid frauds.

What is credit card fraud?

It is the act of using a person’s credit card or account without their knowledge. It aims to make unauthorised transactions, including withdrawing money without the consent of the owner.

Enjoy unmatched benefits – Check eligibility instantly!

Lifetime free Credit Card

It is a form of identity theft and can be done in many ways, including stealing credit card or account details or opening a new account.

Also Read | Mobile wallets and credit cards: How do they work together?

Types of credit card fraud
 

Theft of credit card: One of the most common forms of credit card theft is stealing of a physical credit card. This allows the fraudster to make unauthorised transactions through your card. This could be done either by stealing your wallet or breaking your store etc. Therefore, it is advised to keep your card in a safe and secure place. However, physical credit cards might not have many consequences these days as cards have many layers of protection.

Stealing credit card information: It is fraud when sensitive credit card information is stolen when making transactions. This fraud does not require a physical credit card. Cheaters get sensitive information on the dark web, through phishing scams, or through other data leakage methods. In such scams, it becomes difficult to identify fraudsters as online presence ensures anonymity.

Credit card account fraud: In this type of fraud, scamsters get access to your online credit card account and make fraudulent transactions. It is difficult to detect and stop such transactions once the fraudster gets access to your account. This type of fraud does not require a physical credit card.

New credit card account: In this type of fraud, instead of accessing your original credit card account, the fraudster creates a new account with the existing information. It uses the new account to make unauthorised transactions.

Also Read | Business credit card: How to use it for small business expenses?

What does it mean for small business?

Credit card fraud can lead to severe losses for small businesses. Businesses will have to pay for costs associated with processing fraudulent transactions. You will also lose time and resources for detecting such frauds and addressing them. 

Additionally, if a customer loses credit information after providing information to your business, this might lead to credibility issues. A customer might choose not to shop from your brand again.

Also Read | Credit Cards: How can you use your card for the purpose of investing in stocks?

How do you prevent fraud as a small business owner?

 

Robust verification process: Before starting a small business, make sure to have a solid verification process. For online purchases, ensure to have an address verification system (AVS) and CVV number for every transaction. Businesses use AVS to verify if a customer’s billing address matches the address associated with their credit card. For offline purchases, check the government-approved identity proof of customers to avoid fraud.

Check purchases: Beware of unusual shopping patterns. Check orders that have a different billing and shipping address or customers who use different cards to make payment for a single purchase. These might be signs of a fraudulent transaction.

Update your system: Always make sure to keep your Pos machines and online platforms. Outdated systems are more prone to cyberattacks and phishing scams.

Adopt the latest technology: Opt for an EMV chip-enabled card reader. This will provide a unique code for every transaction which avoids duplication by fraudsters. Choose 3D Secure technology for online transactions. This provides added security to online transactions. Shoppers will have to verify themselves with banks before making the purchase. Additionally, encrypt user data to avoid breach of information.

Educate employees: Train and educate your employees about fraud and the latest technical developments to address such issues in the credit card space.

Also Read | What are contactless credit cards and how does it work?

In conclusion, credit card fraud should not haunt you, especially as a small business owner. To avoid such frauds, make sure to choose an apt verification process, security systems, and the latest technology. If you notice any discrepancy in purchases, inform your bank and the relevant authorities as soon as possible.

Catch all the Instant Personal Loan, Business Loan, Business News, Money news, Breaking News Events and Latest News Updates on Live Mint. Download The Mint News App to get Daily Market Updates.



Read Full Article

Leave a Reply

Your email address will not be published. Required fields are marked *