Credit card fraud: how to spot it and block it in your business?

business credit card fraud

Last modified on January 26th, 2024

In 2024, a North Carolina businessman pleaded guilty to credit card fraud. The owner of multiple cabinet manufacturing and retail businesses in the Hickory area used the company’s credit to make 294 fraudulent charges totaling around $1 million. Read on and you will learn about how you can spot business credit card fraud and prevent it from occurring in your business.

Trustpair can help in the prevention of other types of payment fraud including wire transfer fraud and ACH fraud. Request a demo to learn more!

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How does credit card fraud work?

Credit card fraud refers to the theft of payment card details such as a credit card or a debit card.

Criminals may use credit cards like Visa for their own financial gain, to take cash out, to make a transaction to obtain goods for themselves, for resale, or to make payments to another bank account used by the fraudster.

Some of the types of credit card scams include:

  • Chargeback fraud
  • Stolen details
  • Identity fraud
  • Skimming fraud – happens at the Point of Sale (POS)
  • Phishing fraud
  • Internal fraud – including corporate credit card fraud

 

What are the red flags of credit card fraud?

Super fast shipping

Often, fraudsters will request overnight processing or the quickest form of shipping for items. This would give them the best chance of receiving their orders before the cardholder has put a stop to their card.

Alternatively, their goods could arrive and then they request a chargeback from the bank.

Irregular data

A cybercriminal may have one shipping address that is linked to lots of names and cards rather than to one cardholder. If so, this is a red flag that a fraudster may have a hold of stolen cards. Alternatively, it could signal a gang of fraudsters that are working together across several cards.

Dodgy purchases

A purchase order with an expensive item that has been selected 52 times is an example of a suspicious order.

Buying several high-value items is done so the purchases are made quickly before the card is canceled. This is also to maximize the card’s funds and the potential resale value of the order.

 

How can you prevent credit card fraud?

These are several of the best card fraud prevention methods that businesses can use:

Use a data validation tool

Rather than manually relying on a person to change someone’s data and taking their word, you can automate this process and save time with a tool. You could explore B2C automated solutions like Experian.

Without using reliable databases to confirm information, companies could become victims of invoice fraud. This is because the perpetrators could impersonate real merchants and ask for a change of bank details.

Have cybersecurity measures in place

Small business owners should have cybersecurity measures in place to prevent data breaches. Owners need to accept that business credit card fraud features in companies and act accordingly.

Secure methods could include using the latest data protection recommendations such as two-factor authentication for payments, implementing internal controls, and using fraud scoring.

These security measures could mean that details and identities don’t get stolen which could lead to credit card fraud as fraudulent criminals make a purchase or unauthorized transactions on the chip card.

Train staff on the latest fraud methods

If staff aren’t aware of the latest methods of fraud, how can they respond correctly?

In 2013, hackers stole 40 million credit card numbers of Target customers and gained the personal details and card details of 70 million customers. Cybercriminals also took customer PINs, names, email addresses, security codes, and expiry dates.

Fraudsters led a phishing attack on a third-party contractor of Target. The attack contained malware that took employee’s credentials. From here, cybercriminals could access Target’s billing and contract network.

The attack led to a loss of customer trust in Target and the business had to look at changes across its digital infrastructure.

This example highlights the need for the likes of a merchant and a contractor to be well aware of different types of fraud. Whether it be credit card fraud or payment fraud, take notice of it and be mindful of the risk that each poses.

Audit your accounts

As mentioned, one way that internal staff could commit credit card fraud is by using a company card. However, account audits could deter them.

Small business credit card fraud protection that includes regular and spontaneous financial audits will allow auditors to find anomalies. If they do, no matter how small, investigate them thoroughly.

Regular audits could have stopped business credit card scams occurring like the Hickory businessman who used his business cards for around $1 million worth of charges. This is an example of company credit card fraud and embezzlement.

Documents reveal that two of the businessman’s companies failed to complete their employment tax obligations between the tax years of 2017 – 2022. Prosecutors say that the businessman didn’t account for or pay more than £3.1 million in employment tax fees.

 

How can you report credit card fraud?

If you believe you are a victim of credit card fraud, call the bank of your credit card issuer on your mobile and ask them to freeze the account. Then, contact the Federal Trade Commission at 1-877-FTC-HELP, 1-877-ID-THEFT. Or, log and report the fraud online here , on the federal government’s website.

Recap

Business credit card fraud can ruin small businesses. Beware of the red flags such as suspicious purchases and data that doesn’t add up. Prevent fraud by using an automated data validation tool, auditing accounts, and having solid cybersecurity measures. Trustpair can’t stop commercial credit card fraud but it can protect against and prevent other types of payment fraud.

FAQ

You can report credit card fraud by contacting the Federal Trade Commission at 1-877-FTC-HELP, 1-877-ID-THEFT. Alternatively, log and report the fraudulent activity online on the federal government’s website: https://reportfraud.ftc.gov/#/.

Yes, credit card fraud can be refunded. You can ask your credit card issuer for a refund if you are a person who is a victim of fraud.

Trustpair prevents B2B payment fraud such as vendor fraud, wire transfer fraud, CEO fraud, etc. Our fraud prevention software includes features like international and instant account validation, detailed fraud dashboards, customized workflows, and constant financial transaction controls. Thanks to our fraud prevention solution, businesses gain time, and peace of mind and protect their financial assets against fraudulent activity.

Manage the risks related to corporate treasury.

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