The continuous increase in eCommerce, digital payments, and online money transfer has made the life of business owners and consumers alike much more convenient. However, it also opens the gates to fraudulent transactions that can potentially harm your business financially, damage your reputation, or impact customer trust. While there are many safeguards out there that are also constantly improving, it’s important to be aware of the possibilities of fraudulent transactions, how to spot them, and how to protect your business.
What Is a Fraudulent Transaction?
A fraudulent transaction is any unauthorized financial activity in which people or illegitimate organizations attempt to obtain money, goods, or services without permission from the account holder, whether that be through a payment tool or financial institution. The illegal access of a PayPal or Venmo account, bank account, credit card, or any account containing personal information is an example of fraudulent transactions. Threat actors use this method to take advantage of and bring financial harm either to the account holder, financial institution, or business for their own benefit.
The types of fraudulent transactions we see most often include online payment fraud, credit card fraud, identity theft, wire fraud, or check fraud.
Types of Fraudulent Transactions and What to Do
Let’s break down some of the common types of fraudulent transactions and what you can do to keep your business safe from these threats.
Online payment fraud — This occurs when unauthorized users access online payment platforms or digital wallets. Skilled hackers and threat actors will attempt to use online accounts to either take the money or make a purchase.Credit card fraud — There are several types of credit card fraud, including “card-not-present (CNP)” in which the physical card is not required to make a purchase, “skimming” in which card information is swiped using devices placed on ATMs or point-of-sale devices, and “counterfeit cards” which are fake cards using stolen information.Identity theft — This happens when a hacker or threat actor steals someone’s personal or financial information to make transactions, obtain loans, or make any other financial decision as “them”.Wire fraud — Wire transfer of funds is very common, and wire fraud is the transmission of funds with false claims of legitimacy. One of the most common types of wire fraud comes from phishing scams.Check fraud — While physical checks may be a bit less common than times of the past, they are still quite prevalent. Threat actors might use forged, altered, counterfeit, or stolen checks to steal your information and money.
Robert Taylor | VP/Branch Sales Manager
Fraudulent transactions are scary for small businesses, but there are several good ways to help prevent these incidents from happening. This includes:
Protecting your online information. This means turning on multi-factor authentication or biometric functions, resetting passwords (and not reusing them), and being cautious of public wi-fi connections.Updating the latest anti-virus software and regularly updating your internet browsers and mobile phone software.Monitoring your credit report and understanding how to identify suspicious or unrecognized behavior. There are tools such as “Credit Insights” through Republic Bank’s mobile app that allow you to keep an eye on this information for free.Open an online IRS account, where you can view important information about your taxes, manage it in real time, and monitor balances and payments without worry of risking your information.Use Positive Pay to protect against illegitimate checks. It is a fraud prevention system offered by banks and financial institutions to match check numbers, dollar amounts, and account numbers against an authorized list.
Report Suspicious Behavior Immediately
As the common saying goes, “If you see something, say something.” This rings true for fraudulent transactions as well. Even if it’s a misunderstanding, reporting something fishy leaves you better off than if you were to let it go and it was a serious problem. Fraudulent transactions can leave you and your business at stake, so it’s worth taking the time to report.
You can also talk to a financial professional about any concerns you might have with fraudulent transactions, including our expert staff at Republic Bank. We are here and ready to help. If you have any questions, reach out to us by calling 800-526-9127. You can also find more financial tips for small businesses here.