Know How to Prevent Payment Fraud

Oct 23, 2023
3 minutes Read
Discover effective strategies for combating Payment Fraud, ensuring your business and customers stay secure. Stay ahead with our expert tips.
Know How to Prevent Payment Fraud

In our last blog, we outlined the most prevalent types of payment fraud impacting modern retailers, both in store and online.

Now it’s time to get protected. Here are the top prevention tips for the most common types of payment fraud.

1. Phishing

Protect your business against phishing by being suspicious of any email that asks you to provide financial information. Look for other markers of fraudulent emails, such as spelling errors, invitations to click links, or urgent requests to download attachments. Train yourself and your employees to be wary of these emails, to stop before acting, and to avoid clicking links or providing any information.

2. Smishing

Adopt the same level of suspicion toward text messages asking for financial information, and encourage your employees to do the same. Banks, government agencies, and vendors will not ask you to provide sensitive account information through these channels, so pause and think before taking action.

3. Identity theft

Privacy legislation increasingly requires that businesses keep consumer data safe. Merchants should work with trusted digital payment providers that deploy fraud detection software. Internally, merchants should have policies in place that limit employee and third party access to customer data. Require multi-factor authentication for all systems, platforms, and databases containing personally identifying information.

4. Skimming

Businesses should regularly monitor their Point of Sale (POS) terminals to ensure they have not been tampered with. Train employees to pay attention during the payment process, watch for suspicious activity around payment terminals, and report any unusual interactions. If you’re not accepting chip-enabled cards and using chip-enabled technology, make the upgrade since chip card payments are more secure.

5. Card-not-present fraud

Sophisticated detection tools and verification services can help identify instances of card-not-present fraud. Most digital payment providers perform this kind of authentication during the transaction process, by verifying consistency between the card information and the cardholder’s address. Some retailers require additional authentication for purchases above a certain price threshold. They might call the purchaser to verify their identify or require additional identification.

6. Chargeback fraud

Many instances of chargeback fraud begin as legitimate purchases, but customer frustration with delivery times or product errors leads them to request refunds or replacement items. You can reduce these instances of friendly fraud by providing speedy delivery and prompt customer replies to all questions and problems. Make your refund and return policies crystal clear, accessible, and easy for customers to follow. Keep detailed transaction records in case you need supporting evidence in a chargeback dispute.

7. Business email compromise (BECs)

If your employees are trained to detect phishing emails, they should know the warning signs of BECs as well. As an added layer of protection, have a system of payment verification so no single employee is responsible for acting alone on third party requests for payment or account information. Train employees to always create strong passwords and to never share their account credentials. Lastly, always regularly monitor financial accounts for unusual activity.

Protect Yourself and Your Bottom Line

The harsh truth is that payment fraud can hurt you and the people that visit your brick and mortar or online store. The average cost of a data breach for retailers in 2022, according to research by IBM, was $3.28 million USD. Your reputation is on the line with your customers and you risk losing sales if data goes missing or a breach otherwise impacts your customer base.

It’s crucial to protect your online store against fraud proactively and aggressively. At a time when cybersecurity threats are on the rise, it’s not an option.

We’ve been in the digital payment business since its inception and have seen the ecommerce industry emerge and evolve. If you have questions about payment fraud or would like to discuss the security of your in-store and online payment methods, speak to one of our digital payment specialists at OTT Pay.