One of the worst things a merchant can experience is an instance of fraud. Recovering from fraud can be expensive, and in some cases, make a merchant go out of business. On top of costs, fraud causes merchants to take time away from everyday tasks that are critical to their business and instead repair their company from the after effects of a breach.
Fraudsters are evolving the ways they commit fraud and are making it more difficult to stop. Experts have also revealed instances of fraud are only increasing and the costs associate with fraud are rising. The Association of Certified Fraud Examiners found out that every year, businesses lose over $3.5 trillion due to fraudsters.
According to the Global Fraud Attack Index™, fraud attacks increased 27 percent from the end of 2015 to the beginning of 2016. What’s scarier is that within the past year, overall fraud attacks have grown by 126 percent. Small businesses, which tend to lack anti-fraud solutions, typically suffer greater losses compared to large businesses. For small businesses, the average loss for fraud is $154,000.
Ron Andrews, VP and vertical leader for Convergys, notes that the most prominent form of fraud today are account takeovers. Account takeover is a type of fraud that fraudsters commit by stealing a portion of a victim’s identity, such as their e-mail address, to access their personal financial accounts. At the beginning of 2016, over 25 percent of attempts of account takeovers were accounted for across the world.
“Account takeover is out there, and it’s real,” Andrews said. “There’s a need for all companies — not only in this industry, but everywhere — to protect themselves and protect the transaction and protect the customer information going back and forth.”
So what primary issues are at fault for the rise of fraud? For starters, fraudsters are becoming more advanced and many merchants are falling behind with upgrading their solutions with the latest security features. In order to stop this, merchants need to make it a priority to invest in high-tech solutions and programs that combat fraud for both in-store and online.
To help prevent fraud, all merchants who accept credit card payments to become PCI compliant. Those who lack adoption are putting their business at risk for fraud or a breach and will be held fully responsible for all fines.
Another way to lessen the amount of fraud from happening is through data monitoring. Data monitoring flags suspicious transactions and can increase fraud detection by 50 percent and decrease losses from fraud by 60 percent, compared to merchants that do not integrate data monitoring.
In order to prevent online fraud, it is vital for merchants to install a firewall. Reputation monitoring, anti-malware, and intrusion detection and prevention are some of the benefits firewalls can offer. Utilizing encryption to process confidential information is also important. Secure Socket Layers (SSL) is one form of encryption that safeguards sensitive customer information, such as credit card information or passwords, between a browser and web server.
Instances of fraud and data breaches are only continuing to grow and become more expensive. Thankfully with the right solutions integrated, merchants can help prevent fraud and breaches to help protect their business as well as the personal information of their customers.