Building a business isn’t easy. Every day you make choices, big and small, to help it grow. . But there are people out there looking for ways to trick you out of your hard-earned money. That’s right, we’re talking about fraud. You might be thinking, “Is this really a big problem for my business?” Well, check this out: Between 2023 and 2028, global online payment fraud is expected to result in merchant losses exceeding US$ 362 billion.
These eye-popping numbers show how big the problem is and why we need to talk about fraud prevention or fraud protection – essentially, the same thing—to keep your business safe.
Yes, the idea of fraud prevention might seem like a lot to take in, but every step you take helps in protecting your money. And with the right information, it becomes much easier.
So, are you ready to take that step and learn how to keep what you’ve built safe and sound?
What is Fraud Prevention?
Fraud prevention is the set of measures you take to stop dishonest, harmful activities and protect your business against the theft of money, information, and assets. It means putting in place clear policies, functions, and processes to create a security barrier against various forms of fraud, ranging from petty to more serious crimes. It’s like an automatic security system for your business.
Imagine someone trying to use stolen credit card information to make purchases on your website. Fraud prevention involves setting up systems that can detect such unusual patterns or activities, like multiple purchases in a short time using the same card. By staying alert to these signs, you add extra protection to make sure your business stays safe and sound.
Fraud Prevention Vs Chargeback Prevention
Fraud prevention steps in before any transactions are completed. It basically stops you from losing money through fake transactions, before they happen. It’s like your early warning system against suspicious activities. These tricks are usually from people who aren’t really your customers.
For example: someone trying to use a made-up credit card to buy things from your store. This is where fraud prevention tools catch it before this fraud causes any loss to your business.
On the other hand, chargeback prevention comes into play, after your customer has completed the transaction. It’s about lowering the chances of your customers’ disputing these transactions and asking for their money back. While some of your customers might genuinely have concerns, be cautious—fraudsters, trying to steal, could try this too.
Here’s an example: Imagine a customer buys something but later says they never got it and now they want their money back. In situations like these, chargeback prevention kicks in. It is using tools and strategies like recording purchase history to avoid paying hefty amounts back to your customer.
A smart move you can make to protect yourself from both is to use FastoSafe, a Market-leading Fraud Protection system.
Common Scams & Frauds You Need to be Aware of
The online world has a lot of conveniences but it also comes with some not-so-great things like scams and frauds. So, let’s explore these various scams and frauds together –
Stay informed, stay watchful—your business deserves it!
Identity Theft:
This is when someone tries to steal your personal information, like your name or social security number, to pretend to be you. So, store your sensitive details like your financial information carefully. You need to stay alert because in 2022, more than 1.1 million cases of identity theft were reported on the Federal Trade Commission’s site, alone.
Denial of Service:
Denial of service is like someone trying to make a website or service stop working by causing too much trouble. Usually, cybercriminals overload your systems to cause chaos. So, you should stay sharp for any unusual activity and report it soon to the authorities to protect yourself from any harm.
Malware:
It’s the bad software that can harm your computer or swipe your data without you even knowing. It’s important to keep your antivirus and security systems up to date to create a strong defense wall.
Phishing:
Phishing is when someone tries to trick you into sharing important information by pretending to be someone you trust. So, be careful and check before sharing your personal details to help yourself from falling for their tricks.
Ransomware:
Ransomware is like a computer bug that locks up your files and asks for money to set them free. You should regularly save your important stuff and be careful about clicking on strange links.
Best Practices for Fraud Prevention or Protection
When it comes to running your business, keeping it safe from fraud is a big deal. You’ve got a bunch of smart strategies up your sleeve to make sure it stays strong and secure. From keeping an eye on transactions to making sure your team knows the ropes, these fraud prevention strategies are your secret weapons. And well, if The White House has planned to invest 600 million USD in fraud prevention in 2023, maybe you should too.
So, let’s dive into some of the simple yet powerful strategies –
Implementing Multi-Factor Authentication (MFA):
When securing your business, one smart move is setting up Multi-Factor Authentication, or MFA.
You want to make sure the people showing up are really who they say they are, right?
Here’s how MFA does that: You need to ask for at-least two proofs from people ordering from you, and these proofs need to be different. It’s like a double-check to be super sure.
First, there’s something only they would know, like a secret code or password. Second, something they possess, maybe a special code sent to their phone. And third, something they are, like their fingerprint.
For instance, let’s say someone tries to log into your website without the unique code or the phone key. They won’t get past the firewall. It’s like having not one, but two locks on your door to keep it super secure.
Utilizing Fraud Detection Software/Services
Here’s a smart move for your business: using Fraud Detection Software or Services. It’s like an advanced system constantly analysing your transactions for anything out-of-the-ordinary.
Here’s how it works: The software or service is like a smart filter, analyzing the patterns and behaviors in all of your transactions. And then, it would signal you if it spots anything which might hint at fraud.
Consider this scenario: A sudden change in the usual spending habits of any of your customers. The fraud detection software you use, would catch this shift and give you a heads-up. This would allow you to investigate it and take action before it turns into a bigger problem.
Regularly Monitoring Financial Transactions
As a merchant, it’s a wise choice to closely monitor your financial transactions. Regularly review them, like flipping through a report. You should check your accounts often to spot anything like unexpected transactions, odd patterns or any other red flags. If you notice something not quite right, try to address it as soon as possible before it becomes a major problem.
For instance, you might notice a purchase from a location where you’ve never had a customer from, maybe some place you do not deliver. This consistent monitoring is your tool to catch surprises early and maintain the safety of your business.
Establishing Strong Access Controls:
It’s smart if you control who gets in and out of your business systems. Imagine it like organizing a team—everyone has their role, right?
Here’s the deal: You need to decide who needs access to what parts of your business. Because not everyone needs to see everything. It’s like giving the right tools to the right team members.
For example, your sales team might require customer data, but your warehouse team doesn’t. By fine-tuning who can access what, you can create a secure setup for your business. It’s all about making sure the right information is in the right hands to avoid any misuse of data.
Secure Payment Gateways:
Make use of secure payment platform like FastoSafe. It’s like having a reliable checkpoint for all your transactions.
Here’s the scoop: When your customers make payments, they do it through these platforms. It’s your responsibility to pick trustworthy ones, like a trusted partner for your business.
Now, when you make your choice, focus on the platform’s security features. Look for features like real-time transaction monitoring, giving you instant insights into your dealings or the ones which have AI screening for your transactions.
But wait, there’s more to think about. When you’re picking a platform, check out more of these extra features that push up the security and make things easy for you and your customers. The more, the better.
Data Encryption:
Let’s talk about another smart strategy for you as a merchant: data encryption. It is like putting a cloak of invisibility on your important information.
So, when we say data encryption, think of it like turning your important details into a secret language. Only the systems you trust can understand it. It’s sort of like having a secret password between your data and your security systems.
Now, if someone tries to snoop around, all they will see is a bunch of mixed-up letters and numbers. It’s like trying to read a book in a language they don’t know. This extra step makes sure that even if someone gains access to your information, they won’t make heads or tails of your sensitive business data.
Customer Verification and Due Diligence:
Another wise move to protect your business dealings is making sure your customer’s information adds up.
Here’s the drill: When dealing with your customers, it’s important that you do your homework.
So, with a new customer, take a moment to confirm their details. Picture it as double-checking your guest list to ensure everyone invited to the event is the real deal. This step builds trust in your customers, an important ingredient for your growth. It’s about being absolutely sure of who you’re doing business with.
You can also use only one platform to do away with your worries about fraud. Use FastoSafe, a market-leader in fraud protection.
Credit Card & Debit Card Fraud Protection
Only in the second quarter of 2023, nearly 103,842 cases of Credit Card Fraud have been reported to FTC.
Credit card fraud is a headache for you and your customers. It doesn’t matter if it’s a stolen card or a virtual hack into your customer’s account. Unauthorized charges can lead to steep bills and potential damage to your credit score.
It can hit your wallet hard. But don’t worry, there are things you can do to outsmart the fraudsters and catch unauthorized card use early. Keep a close eye on your accounts regularly to keep your business money safe and sound. Stay sharp, stay on top of things!
Effective Strategies for Credit Card Fraud Protection:
Card Verification Value (CVV):
Implement strict CVV checks and make sure your customers provide this additional code for added security.
Address Verification System AVS:
You should use AVS to cross-verify the billing address to minimize the risk of unauthorized transactions.
Two-Factor Authentication (2FA):
Enable 2FA for all your transactions and request or advice your customers to enable it on their accounts as well.
Transaction Velocity Monitoring:
You need to keep an eye on the frequency of transactions from the same source to spot potential fraud patterns.
Geolocation Restrictions:
Try limiting your transactions to specific geographic locations in order to reduce the chances of fraudulent activities from unfamiliar regions.
3DS Secure:
Use card providers which have 3D Secure authentication. You should also advice your customers to do the same.
E-commerce Fraud Prevention
Running an online store is like you are on a virtual hustle, but there are challenges you need to watch out for. Before we jump into winning strategies, let’s face the hurdles together:
Fake Identities:
Some bad guys out there might steal important details like credit card numbers from your customers and pretend to be them. Or simply steal your customer’s information and use it to for committing frauds with other online merchants. Because of such tricky crooks, it poses a challenge to identify who are your genuine customers.
Hidden Threats:
E-commerce fraud is like a sneaky ninja—it tries to stay hidden. But the longer it stays secret, the more harm it can do to your business. It’s a bit like an invisible danger that you need to find and stop. And to find it in time means you really need to have your sleeves rolled up.
Time for strategies to prevent e-commerce fraud
Regular Security Checkups:
You can keep your online store in good health by having regular security audits. Make sure your shopping-cart software and other plugins are up-to-date. Also look into things like the having regular website scans, using strong passwords, etc. Because you need to stay on top of things to spot vulnerabilities before the bad actors do instead.
PCI Compliant:
To play in the big league, your online store needs to be PCI DSS (Payment Card Industry Data Security Standard) compliant. If you’re using a SaaS-based platform, like FastoSafe they have it in built for you.
HTTPS for a Safer Connection:
HTTPS is your best friend and it truly means it. Because it encrypts your website’s data and protects your customers’ information. Also, you should invest in an SSL certificate to lock down your transactions further and keep hackers at bay.
Do Shopify have Fraud Protection?
Running a Shopify store is great, until it’s not. Because it has some limitations in its fraud prevention mechanism which makes it vulnerable to fraud. So, let’s understand what are these especially if you are a user:
Why Shopify Stores Are Vulnerable to Fraud:
- Limited Rule Types and Rule Setting: Shopify has restricted capabilities in setting rules. For instance, you can’t create rules that cover multiple aspects like billing and shipping together. And this inability to cross reference your items or details leaves room for fraud. But this isn’t all, you also need to understand fraud schemes and behaviour signs to be able to accurately set rules.
- Manual Review Process: To catch potential fraud, you need to manually inspect orders. This involves tasks such as contacting customers, etc. And this slow detection can cause you to lose huge money before you realise.
Why You Should Work Actively with Fraud Protection – And how we can help you
If you’re operating your business without effective fraud prevention, then it’s practically like you are walking through a financial minefield. The risks are real – losses, chargebacks, and a dent in your reputation. However, with customized fraud protection, more important if you’re in the high-risk business sector: you can turn the tables.
And well if you aren’t doing it, you are falling behind your competitors. Because they are seriously investing time and effort into these. And this isn’t we telling you. Data shows that global fraud prevention market is expected to double between 2023 and 2027, reaching over 100 billion dollars.
A strong prevention strategy isn’t only about avoiding pitfalls, it’s how your smartly work to secure your business. With the right approach, you can worry less about losing your revenue, financial stability and the impact of chargebacks, overall. And this way you can also foster customer confidence, a dual-win!
The benefits are tangible too.
Your business would also gain operational stability and you can steer it away from disruptions caused by fraudulent activities. And you really need to stay one-step ahead. Using tailored strategies allows you to do just that: adapt quickly and also adjust your defenses to counter new challenges, when needed.
How PayFasto can help you
For such custom needs, you need a partner platform like FastoSafe which you can fall back on.
With tools like Kount and Red Shield, it checks every transaction for fraud, backed by smart AI screening. Handling chargebacks and disputes? It uses Ethoca and Verifi CDRN to protect you. So, look no further, FastoSafe is your hassle-free, market-leading solution for timely fraud prevention.
Running a Shopify store is great, until it’s not. Because it has some limitations in its fraud prevention mechanism which makes it vulnerable to fraud. So, let’s understand what are these especially if you are a user:
