Online Shopping or Selling? Just be Careful Out There…

When it comes to online shopping, it’s not just customers who fall victim to scams. Businesses and sellers are frequent targets too.

According to Business Wire, payment fraud attempts on US businesses increased by 71 percent in 2023, highlighting the importance of vigilance.

Dennis Pederson, CEO of FastoPayments, has compiled a list of common payment scams that business owners should be aware of — and how to respond.

Baiting the Hook: Phishing Scams

Phishing scams trick people into sharing sensitive information, such as credit card details or passwords. Scammers typically send fake emails or texts linking to websites that mimic legitimate businesses. Once users click the link and enter their information, it’s stolen.

Businesses affected by phishing may suffer financial and data losses, which can erode customer trust and damage reputations.

How to Protect Yourself:

• Educate employees on red flags like unexpected requests for personal data, spelling errors, suspicious senders, or emails with urgent tones.
• Avoid clicking unfamiliar links or downloading suspicious attachments.
• Implement advanced email filters, multi-factor authentication, and ensure software is always up-to-date.

Chargeback Fraud: The “Friendly” Scam

Chargeback fraud, or “friendly fraud,” occurs when a customer disputes a legitimate charge after receiving their order. They may falsely claim they didn’t receive the item or that the payment wasn’t authorised.

Unlike true fraud, these scammers appear trustworthy, but their actions cost businesses through losses and chargeback fees.

How to Protect Yourself:

• Ensure merchant names and transaction details are clear on banking apps to avoid confusion.
• Enable package tracking and delivery updates to confirm goods are received.
• Use two-factor authentication for payments and verify large orders before shipping.

Return Fraud: Manipulating Policies

Return fraud involves customers exploiting return policies to obtain refunds illegitimately. They might return different items, claim products were defective, or use items briefly before returning them.

How to Protect Yourself:

• Develop clear, non-negotiable return policies requiring items to be returned in original condition with tags intact.
• Inspect returned goods thoroughly and monitor transactions for suspicious patterns.
• Implement delivery tracking to confirm authenticity.

Merchant Fraud: Fake Businesses

Merchant fraud involves scammers posing as legitimate businesses to deceive customers. They may sell counterfeit or low-quality products or fail to deliver goods altogether.

This fraud can tarnish genuine companies’ reputations, cause financial losses, and result in higher processing fees for the industry.

How to Protect Yourself:

• Ensure company names, logos, and transaction details appear on bank statements for transparency.
• Secure your payment methods with multi-factor authentication and clear terms and conditions.
• Regularly update software and stay informed on fraud prevention techniques.

Wire Transfer Fraud: Tricking the Trusted

Wire transfer fraud involves impersonation of trusted individuals or organisations to deceive businesses into transferring money. Scammers create fake invoices or urgent requests, preying on emotions and tight deadlines.

How to Protect Yourself:

• Never send money unexpectedly. Ensure transactions are approved by multiple parties.
• Improve cybersecurity protocols, use strong passwords, and guard sensitive banking details.
• Educate employees to double-check invoice authenticity and seek second opinions when in doubt.