• Startups
  • June 17, 2020

3 Simple Ways To Protect Your Business From Fraudulent Payments

article
Credit card fraud is an increasing threat to e-tailers. It doesn’t discriminate and has the potential to take your business under. What’s more, you won’t be compensated by the bank if you fall victim. No, instead you will be expected to absorb the financial implications. Ouch. This is why it is so important to take preventative action and protect your business from other people’s criminal actions. 

Automate checks using tools from your payment service provider 

Whether you have an annual turnover of £1,000 or £1 million, you are attractive to fraudsters who have the ability to inflict thousands of pounds worth of damage a day. So ensure you have access to the best tools to detect their sophisticated behaviour. A good way to start is by asking your payment service provider to equip you with access to the programmes they’ve developed to help protect their clients. If they’ve not yet made them readily available to you yet, ask, and make sure you take time to learn how to use them effectively. They could be a financial lifesaver.   

Two pronged attack 

Alongside an automated checker from your payment service provider, implement a system of manual checks. For example, we automate checks across all of our sales, to identify transactions that seem suspicious. This could be something like a different billing and delivery address, or a completely bogus billing address. Once these suspicious orders have been identified, they are then manually audited by our fraud prevention team who can apply their knowledge of customer behaviour to determine whether a crime is being attempted or not. This team looks at ‘tells’ like the types of product ordered. Alarm bells will ring if unusually paired items are bought together, such as 50 printer cartridges and a tin of coffee. Similarly, bulk buys put us on high alert. 

This is because we offer free delivery, so buying in bulk is fairly rare. In these instances, we will call each customer who placed the order to confirm whether their details are authentic. 

If we are not satisfied with their response, for example if they can’t explain the discrepancy in their billing and postal address, we alert the bank of possible criminal activity and issue a note to the customer explaining why their order will not be delivered. These manual checks, plus the calls to customers, might seem laborious but they are really worth the time invested.  

Add 3D Secure authentication 

Remember what I said about your business being liable? Well, there is one exception and to qualify for this you need to apply a 3D Secure verification process at the final stage of the payment journey. The most recognisable examples are ‘Verified by Visa’ and ‘MasterCard SecureCode’. What they, and all similar providers do, is giving you an extra security layer, limiting your exposure to credit card fraud, while placing liability with the bank. Beware though, there is a potential downside. In our experience, 3D Secure verification can stop customers from finalising their purchase, because they’ve forgotten their password. If you end up with too many abandoned baskets, the obstacle it presents to customers could outweigh the financial benefits of reducing the proportionate fraud.   

By Nichola Ansbro, call centre manager and fraud protection expert at Office Kitten

In closing

Nothing in this article constitutes legal advice on which you should rely. The article is provided for general information purposes only. Professional legal advice should always be sought before taking any action relating to or relying on the content of this article. Our Platform Terms of Use apply to this article.



Related Articles

Read more of our latest blog posts, featuring all the latest legal news, analysis and opinion from our expert lawyers.

blog image
  • By LawBite Team
  • May 01, 2022
What are Articles of Association?

Setting up a limited company is one of the most common routes entrepreneurs take when they start their business. If you have decided to take this r...


Startups
blog image
  • By LawBite Team
  • May 01, 2022
Do I need a privacy policy on my website?

The short answer is yes, all businesses that process personal data must have a detailed privacy policy. In most cases, a privacy policy will sit on...


Startups
blog image
  • By LawBite Team
  • April 13, 2022
Understanding Conflict of Interest (COI)

One thing our lawyers consistently emphasise to our clients is the importance of having well-considered and expertly drafted documentation, for exa...


Startups

LawBite can help you

LawBite is on a mission to provide business legal advice that is easier to access, clearer to understand and much cheaper. Our on-line legal advice platform can quickly connect you with expert business legal advice. Our friendly, highly qualified business lawyers, solicitors and mediators will give you the guidance and reassurance that comes from customised legal advice for small and medium sized business.

Whether you are bringing or defending a legal claim, outsourcing work, want a business contract review to ward off disagreements, talk to an expert trademark lawyer, resolve a contractual dispute with methods like mediation and arbitration, or getting your new company set up and on the right footing with a robust shareholder agreement and GDPR standards, we can help you succeed.

defend a claim

Talk to a Lawyer

Book a Call
defend a claim

Essentials Plan

Join for Free