Shopping, in-store or online, never goes out of style. No matter the holiday or season, millions upon millions of transactions take place every day. And while profitable for businesses, cybercriminals have also taken notice.
Businesses must protect themselves, but the first step in understanding the threats facing them is understanding the types of fraud in business. These come in the form of:
1. Chargeback fraud - A merchant receives a chargeback because the cardholder denies making the purchase or receiving the order, yet the goods or services were actually received. A chargeback is a transaction disputed by the cardholder or their card issuing bank.
2. Card testing - A cyber-criminal is unaware if a stolen credit card number is valid, or they don’t know how high the credit limit is. They might make small test purchases to confirm the card information is valid. Organized criminals can card test on a larger scale by using computers to test thousands of stolen card numbers at once. This type of fraud tends to be more problematic for merchants, who might get hit with separate chargebacks for many small purchases, incurring fees for each transaction or authorization.
3. Phishing - When an email, text, or phone call mimics reputable entities like banks, online resources, and credit card companies to trick the recipients into sharing their financial and personal information. The targets may be directed to malicious web sites also posing as legitimate sites where they will be asked to enter login credentials and other personal information the attackers can use to commit identity theft.
4. True fraud - Using stolen credentials, fraudulent transactions are conducted by either opening accounts in the names of identity theft victims or using a stolen credit card number to make purchases online. Most commonly, these fraudulent purchases are eventually disputed by the actual cardholder which results in the card account being closed and the assignment of a new account number and card. If the dispute is considered valid, the merchant is required to refund the amount of the transaction plus a chargeback fee paid to the payment processor.
These frauds and scams are not only inconvenient, but they can be potentially costly for business owners and customers.
Contact us for more information on these types of fraud in business and how to prevent these crimes.