The global increase in the use of the internet and technology has resulted in changes throughout industries. They all had to choose between going ahead with the time, undergoing digital transformation, and accepting the changes or getting left behind. Commerce was one of the industries that jumped aboard as soon as possible and embraced the changes.
Setting up an online shop became essential for any company that wanted to remain in business, especially as more and more customers wanted to use the benefits of online shopping. The rapid shift to e-commerce has significantly increased online sales, but it also resulted in increased fraudulent activities such as financial scams. Fraudsters and scammers will always follow the money, which is why it is more important than ever for companies to start taking proper steps to protect themselves from financial scams, especially fraudulent charges.
Our growing internet presence, especially when it comes to businesses, has resulted in an increase in fraudulent actions. Not only are fraudsters able to access more people than ever, but there has never been more financial data available online, resulting in a significant increase in financial scams.
According to the latest half-year Fraud Report published by UK Finance in October 2022, there has been a decrease in some types of financial fraud, but at the same time, other types are rising. Lost or stolen card detail cases grew by 35%, debit and credit card interceptions increased by almost a quarter (23%), and card theft is up by 101%. However, a decline of 13% in fraud compared to 2021 shows that the increase in adaptation of fraud detection and prevention technology is starting to make a difference. SEON explains credit card fraud detection as a set of tools, methods, and techniques designed to detect and prevent fraudulent purchases. This allows companies to protect themselves and their customers from the growing risk of financial scams.
Fraudsters and scammers are constantly coming up with new and sophisticated ways to commit malicious actions, which is why there are so many different types of financial fraud. While they can vary from identity theft and account takeover to credit card fraud or application fraud, most eventually have the same result – a chargeback. Fraudsters usually use stolen data to commit fraudulent activities, and once legitimate users discover their data was stolen, they will apply for a chargeback. While this is a great way to ensure your customers are protected, and they get their funds back, it will still have a significant impact on the business, from financial loss to reputational damage. Reputation X claims that reputational damage is even more substantial than financial damage, as it brings additional long-term consequences, such as revenue loss, brand damage, and even investigations. This is why it is essential to prevent it before it happens instead of just reacting to it.
- Implement a fraud detection and prevention strategy
Protecting your business needs to be your priority, and you should take all the necessary steps to ensure it. Determining the most common risks, fixing any vulnerabilities fraudsters can exploit, and implementing security strategies to detect and prevent fraudulent activities before they can cause any damage will take you in the right direction. Unfortunately, fraudsters will never stop trying to exploit innocent victims, but you can stay ahead of them and protect yourself.
- Minimize the confusion by being as clear as you can.
Sometimes chargeback requests don’t happen because of fraudulent activity but because of some issues your customer experienced. Sometimes it can be because your product description didn’t match the actual product or you weren’t clear on delivery dates, so customers presumed their products would not arrive. In other cases, it can happen because customers didn’t recognize the charge on their bank statement or they decided they don’t want the product anymore. You can prevent this by being descriptive with your products and including pictures from different angles, providing clear and precise policies that customers can easily understand, and even ensuring your merchant descriptor is recognizable. Additionally, you should ensure customers can contact you quickly and over different communication channels. This allows your customers to contact you when they need something or if there is some issue before submitting a chargeback request.
- Be vigilant
By remaining vigilant and taking the proper steps, you can significantly reduce the risks of becoming a victim of a financial scam. Stay informed about the recent trends in cybercrime and cybersecurity, and update your systems accordingly to ensure you stay ahead of fraudsters. For example, if you realize there has been an increase in card-not-present fraud, you can ask customers to confirm their CVV number during every transaction.
Fraudsters and scammers show no signs of stopping their malicious activities, putting everyone, from individuals to businesses, in danger of becoming a victim. Taking the proper steps to protect yourself and your customers from these dangers is no longer an option but a necessity. Follow the steps above and start protecting yourself from fraudulent charges.
Disclaimer: MoneyMagpie is not a licensed financial advisor and therefore information found here including opinions, commentary, suggestions or strategies are for informational, entertainment or educational purposes only. This should not be considered as financial advice. Anyone thinking of investing should conduct their own due diligence.