Running your own business comes with a whole host of challenges. One in particular that you could do without, is falling victim to fraud. It has the potential to be highly disruptive for your small business and is something you need to be constantly on the lookout for.
Financial fraud is a complicated problem and fighting back to defend your company from it requires careful planning and consideration.
To help your business stay prepared, we’ve put together a list of common types of business fraud, along with some tips on how to keep your organisation safe.
The chargeback system for credit cards is a highly useful tool when customers have been defrauded of their money, or if a company is failing to comply with a return.
If a rogue transaction appears on a bank statement, customers can request said transaction to be reversed, and the money to be returned to their account.
Unfortunately, such a system is easily abused, which has resulted in the ‘chargeback fraud’ dilemma. Chargeback fraud happens when a customer actions the chargeback process while withholding the goods they’ve received – leaving businesses both out of pocket and out of product.
While chargeback fraud is more common with larger purchases, businesses of all sizes are prone to this scam. The chargeback process is in place to support consumers who feel they have been the victim of fraud themselves but, ironically, the system is frequently used to conduct fraudulent activity.
While chargeback fraud can be a highly impactful attack, there are some steps that can be taken to prevent and challenge it.
Track your deliveries: Sometimes, customers may issue a chargeback request claiming that they haven’t received the goods they ordered. Adequate delivery tracking solves this issue, especially if deliveries are signed for.
Some light admin: You’ll want to leave no stone unturned when it comes to chargebacks. Sometimes, the reason for these requests can be as simple as your business name not matching up to an order placed online. Ensuring your business details are consistent across your website and bank will help prevent issues.
Good customer service: It’s important to remember that chargebacks can have pure intentions. For example, if your customer service team has failed to accept a legitimate return, a disgruntled customer is likely to then proceed through the chargeback process before reaching out again. Having strong customer service negates this risk.
Invoice fraud mainly happens on a business-to-business basis and involves one company issuing a false or exaggerated invoice in exchange for funds.
Sometimes, invoice fraud will also involve tampering with genuine invoices to divert funds from one account to another.
There are a lot of moving parts involved with invoice fraud, which makes preventing it especially difficult. Though, there are some steps to take:
Internal education: Sometimes, the main point of failure with weak invoices is your team. Neglecting to properly train your team around the signs of a fake invoice or the steps they can take to spot one may result in some making their way through your system.
Confirm payees: Confirmation of payees is a relatively new mechanism which was added to both personal and business banking around 2019. This system acts as another layer of security for verifying that your transactions are all proceeding as intended. If there are any mismatches, make a note and proceed with caution.
For a handy checklist of things you can do to keep your business safe, read the second part of our blog here.
Aldermore’s business savings accounts are designed to keep your financial planning in check with a safety net. Find our more about our business savings products here.