The small business guide to preventing online fraud

Research carried out by National Fraud Authority (NFA) and the Department for Business, Innovation and Skills (BIS) has revealed that a quarter of all small businesses have suffered some form of Internet based crime in the past year.

Home Office Minister for Crime Prevention Jeremy Browne said: "For too long online fraud has been seen as a victimless crime or simply a cost of doing business in an internet age, but left unchecked it can cost people their livelihoods."

The types of online fraud that small business owners need to be aware of include:

• Credit and debit card fraud.
• Identity theft.
• Mobile phone transaction fraud.
• Pay-Per-Click (PPC) fraud from online advertising such as Google AdWords.
• Delivery address fraud.
• International purchasing fraud.
• Pharming fraud where customers are directed to a bogus website.
• Malware that attempts to collect credit card information from merchants' online businesses.

Cybercrime can take many forms, but for online merchants being vigilant regarding the transactions that move through their online stores is vital to ensure that fraud it kept to a minimum.

Smaller businesses can often be unaware of some types of fraud. A good example is Pay-Per-Click fraud that could cost your business a great deal of money as each click on your ad is charged to you. The bogus ad also redirects the ad to the criminals' website depriving your small business of a potential sale.

Combating online fraud in your small business

As the Internet has continued to expand as a retail channel, so fraud has also expanded to exploit online businesses. Whether your enterprise has an online department or is a completely e-commerce based operation, there are a number of steps you can take to protect your business from online fraud:

• Always check the credentials of new customers. This is particularly important if they are placing large first orders with your business.
• Are the goods being ordered of high value that can be easily re-sold? This could indicate a fraud especially if multiple quantities of the same item are being ordered.
• Is the delivery address valid? Fraudsters will often try and get businesses to deliver to bogus addresses. PO Boxes should always be avoided.
• Check that the debit or credit card is not stolen. Also, is the purchaser the actual cardholder?
• Is the customer trying to split the cost of their order over several cards? This could indicate that the cards are stolen.
• Quiz a suspicious customer about their past orders if you think they could have stolen one of your regular customer's identity.
• Are orders from parts of the world your business doesn't normally sell to?
• Businesses that trade with other organisations should be aware of counterfeit invoice fraud.
• Always keep the firewall on your systems fully up to date to avoid customer details being stolen.

As most of the fraud that takes place is where the customer's card is not present, it's vital that your business has systems in place to identify potential fraudulent transactions. Answering 'yes' to any of the above questions doesn't automatically mean a fraud is taking place, but it does mean that that you should take a closer look at these orders before they are processed.

courtesy by : techradar.com