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Fraud Protection for Small Businesses

Fraud can have a devastating effect on a business, with estimates putting the cost of fraud to the UK economy at around £110 billion. Potential consequences include reputational damage, loss of consumer confidence, unsettled employees, and disruption to your business’s cash flow.

As such, it’s crucial to have a solid understanding of how to protect yourself from online fraud. We’ve put together a guide to online banking and credit card fraud protection for small business, helping you keep your company – and your customers – protected from fraudulent behaviour.

What is fraud?

Fraud, in a nutshell, is an illegal activity perpetrated by a person/entity against another for financial gain. Several different types of fraud can affect businesses, including employee fraud (i.e., forging checks, stealing assets), customer fraud (i.e., chargeback fraud, bad checks), corporate identity fraud (i.e., impersonating a legitimate business for financial gain), invoice fraud (i.e., submitting inflated or fake invoices), CEO fraud (i.e., impersonating a CEO to convince someone to make an urgent payment), and e-commerce fraud (i.e., using stolen credit cards to make purchases).

Although fraud is generally presented in the media as an activity that primarily affects individuals, businesses are equally as likely to be the victims of fraud, if not more so. In some senses, businesses are still playing catch-up, with up to 50% of small business owners and senior managers exposing themselves to invoice fraud by neglecting to take even basic precautions. As a result, it could pay dividends to invest in a robust fraud protection strategy, ensuring that your customers remain protected while safeguarding your firm against potentially calamitous financial ramifications.

Top 4 fraud protection tips

As you can see, knowing how to protect yourself from online fraud is crucial. Here are four of our top fraud protection tips:

  1. Pay attention to PCI DSS requirements – Adherence to the PCI DSS requirements is an excellent way to improve your company’s fraud protection. Specifically designed to help you store, transmit, and handle cardholder information safely, PCI DSS can ensure that you don’t fall victim to e-commerce fraud. Plus, it’s mandatory for companies that accept card payments to follow PCI DSS, and failure to comply can lead to serious penalties, including fines and mandatory forensic examinations.

  2. Implement basic checks against invoice fraud – Invoice scams are among the most common types of fraud perpetrated on businesses. However, by implementing a couple of essential safeguards, you can make sure that you’re protected. First and foremost, you should review all invoices before you authorize payment. This helps to ensure that you’re paying legitimate suppliers, rather than fraudsters. Implement more rigorous checks for larger amounts and get in touch with your bank immediately if you suspect that you’ve been the victim of fraud.

  3. Train your employees on credit card fraud protection for small business – Your employees are essentially your first line of defence against fraud, so it’s a good idea to make sure that they know what they’re doing. By providing every member of your team with basic training regarding online banking fraud protection and credit card fraud protection for small businesses, you can stop most forms of fraudulent behaviour before it severely affects your business.

  4. Consider switching to a Direct Debit payment system – Finally, you should think about your payment system. Payments are one of the key areas that fraudsters are looking to exploit, with Juniper Research predicting that retailers could lose $130 billion (£100 billion) in digital CNP (card-not-present) fraud over the next five years. Direct Debit is one of the safest payment methods around, so if you’re worried about bank transfer fraud protection or credit card fraud protection for small businesses, this could be an area to focus on.

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GoCardless Ltd., Sutton Yard, 65 Goswell Road, London, EC1V 7EN, United Kingdom

GoCardless (company registration number 07495895) is authorised by the Financial Conduct Authority under the Payment Services Regulations 2017, registration number 597190, for the provision of payment services. GoCardless SAS (23-25 Avenue Mac-Mahon, Paris, 75017, France), an affiliate of GoCardless Ltd (company registration number 834 422 180, R.C.S. PARIS), is authorised by the ACPR (French Prudential Supervision and Resolution Authority), Bank Code (CIB) 17118, for the provision of payment services.