What can I do to protect my business from credit card fraud?

Individuals are not the only targets of credit card fraud. With the day-to-day demands of running a company, it can be all too easy for business owners to leave their finances vulnerable to criminal activity — leading to serious financial implications.

While some criminals will use lost or stolen credit cards to make unauthorized transactions, a physical credit card is not necessary for fraud to be committed.

Criminals can commit fraudulent activity online by obtaining essential details like an account number and the holder's name. And they can do it by mail or over the phone — all without the credit card ever leaving the account holder's possession.

It’s vital that every business remains vigilant when managing and monitoring their credit accounts.

How credit card fraud affects businesses

Unlike credit card fraud against an individual, business credit card fraud can harm multiple people — and affect the reputation of the company itself. Here are just some of the reasons why it's crucial for business owners to ensure the security of their credit accounts:

• Stolen funds

• Depleted funds from unauthorized transactions can cause serious cash flow issues. It can be challenging to meet financial commitments like inventory purchases. It can also cripple a business’s ability to make other necessary payments, such as rent, marketing/advertising fees, and insurance premiums.

• Damaged reputation and relationships

• Late payments can cause damage to relationships between a business and its suppliers. An inability to complete orders or deliver services as a result of limited funds can also negatively affect the reputation of a company.

How to avoid credit card fraud in business

Thankfully, there are many precautionary steps that companies can take to minimize the risk of credit card fraud and identify suspicious activity before it results in long-term problems.

Regularly review statements

As criminals do not need to have a physical business credit card in their possession to commit fraud, unauthorized activity could be happening without your knowledge. Fraudulent transactions on a business credit card statement may be the first indicator that you’ve fallen victim to fraudsters.

Make sure to regularly review statements so that you can detect any unfamiliar charges. Consider conducting weekly reviews using online banking tools to keep the task manageable. Ensure that issues are reported to the credit card company as soon as possible.

Keep your credit card and its details secure

When it comes to business credit card fraud, prevention is the best means of protection. Ensure that the company credit card is stored in a secure location and only carried on your person when required.

Using wallets with built-in strip-reader protection and requesting an EMV chip card can thwart fraudsters using illegal devices known as skimmers. These devices collect data from the magnetic strip of a credit card and the information collected is then coded into counterfeit cards.

Avoid sharing credit card details with unreputable sources. If you're making online purchases, take steps to check the website is legitimate. A small padlock icon within your browser can indicate that a site is secure. Don’t disclose personal or credit card information over the phone unless you can verify they are a trusted source.

Limit access to business credit cards

The fewer individuals with access to a company’s credit cards, the less vulnerable the business is to fraud through human error and misuse of funds.

Restrict access to only the most trusted members of staff and ensure that there are procedures in place to review, approve, and monitor purchase requests.

You can also take advantage of various security features offered by your credit card company. These may include automatic expense reports, allowing you to see spending. You can also set credit limits on staff cards.

Don’t forget to update passwords

Set unique and complex passwords when using online banking accounts and software. Change them regularly to minimize the risk of hackers gaining access to your accounts.

Applications such as 1Password and LastPass can help to store and manage intricate login details, as well as allowing you to share these credentials with employees securely.

Some credit card companies also use technology to make traditional passwords redundant. These may include fingerprint app logins or voice-identity recognition for telephone banking, which are much more effective at verifying the account holder's identification.

Remain vigilant when accepting orders

If you run an ecommerce business, establish measures to reduce the risk of accepting orders placed via credit card fraud.

Collect all the credit card information when taking payment, including the full address and phone number of the account holder. This will stop fraudsters who are using stolen card details from placing an order.

Be wary of any orders with different billing and shipping addresses, especially if this is for a sizeable next-day order. Credit card processing companies like Stripe will automatically flag issues such as fraudulent addresses.

What to do if you fall victim to business credit card fraud

It’s imperative that you report credit card fraud right away if you suspect someone has stolen your credit card or you notice suspicious activity on your account. Contact your credit card company so it can cancel the card, investigate the activity to verify if fraud has occurred, and issue you with a new card.

Regardless of the value of unauthorized charges, U.S. federal law states that the account holder is only liable for $50 in the case of credit card fraud. Many credit card companies also have zero liability policies. This means that you will not be responsible for fraudulent charges on your account.

Once you have reported the issue to the credit card company, file a local police report and contact the Federal Trade Commission to submit a complaint. You can also set up a fraud alert and get a copy of your business credit report to review by contacting a credit bureau.

Finally, update any security information that could have been compromised, including PINs and passwords, to reduce the risk of fraud occurring again in the future.