Small businesses seem set up to fail with more than half of them closing in the first five years of being open. One way you can help your company pass that benchmark is by tackling the serious issue of fraud. Most of the this can manifest in the form of identity theft, friendly fraud or insurance scams, but knowing what to look for can help you stop it from happening in the first place or protect your business when it does.
Friendly Fraud
When a purchase is made by credit or debit card and the charges are later reversed, this is called friendly fraud. Chargebacks happen when customers receive damaged goods, do not get their items or misunderstand the sale. These reversals can damage your company’s reputation as well as the willingness of card companies to work with you. To prevent chargeback fraud, you can partner with firms specializing in fighting this type of fraud. Having an easy to understand returns and shipping policy, as well as a signature attesting to the terms of the sale can encourage customers to reach out to you first with problems instead of initiating chargebacks.
Identity Theft
Identity theft can happen to you or your customers at any time and when a stolen card is used to purchase goods and services from you, or a client’s data is stolen from your computers, your company could be held liable. In-person transactions can be verified by asking for identification for card purchases, but ecommerce can be trickier. Companies like Ethoca can help your ecommerce transactions be more secure by verifying the identity of the cardholder, tracking suspicious activity and aiding in the recovery of losses. You can also increase your cybersecurity by keeping your financial information, and that of your clients, behind good firewalls and limiting the access through secure passwords.
Insurance Scams
With more and more companies adding audio-video recording to their physical storefronts, insurance scams are becoming harder for malicious actors to pull off, but they do still happen. This type of fraud is usually done by an employee or customer claiming that they suffered an injury on your premises or otherwise falsifies insurance claims. You can prevent these by having monitoring systems clearly present with signs reminding everyone that they are there. Your insurance company can even give you tips customized to your industry or type of building.
Protecting your business from fraud means taking some proactive measures on your part and finding the right partners to secure your in-person and ecommerce locations. You can find firms dedicated to making online transactions more secure and fighting online fraud as well as security system companies to install cameras and monitoring systems.
