Paul Marcantonio, Executive Director, UK and Western Europe, ECOMMPAY, looks at the ways in which fraudsters are taking advantage of the pandemic, the different forms of payment fraud that are preferred, and how businesses can mitigate against attacks.
Fraud has grown to such heights that we’re now living in a digital fraud epidemic. The National Cyber Security Centre has taken down more online scam attempts than the previous three years combined during the past year. Banks and card companies have prevented £1.6bn in unauthorised fraud, and UK businesses reported gross losses of £479mn due to Authorised Push Payment (APP) scams. While much of this growth can undoubtedly be laid at the feet of fraudsters, who are continually searching for ways to deprive business owners of their hard-earned cash, they were certainly given a leg up by the pandemic.
COVID was the root cause of some hasty societal changes, with many of us having to adjust to contactless shopping rapidly. This meant that we increasingly adopted ‘alternative’ payment methods, even among demographics that hadn’t previously used the technology. In fact, one in five (21%) 45 to 54-year-olds increased their digital wallet usage during the pandemic, while more than half (51%) of over 55s said they had used a digital wallet. While the shift was originally temporary, many have been won over by the additional flexibility and convenience brought by the technology.
Unfortunately, this has also had the unsavoury side effect of making online scams easier for fraudsters. As a result, a digital environment exposes us to increased incidences of fraudulent activity, and this is compounded by the fact that many victims will be new users who lack the experience necessary to spot fraudulent attempts.
Fraud can cause great damage to a business. So, let’s take a look at how you can protect yours from future payment fraud attacks.
Choose a payment provider who is trusted
A reputable payment provider will add an additional layer to your fraud prevention strategy, as well as stimulate your businesses growth. Customers will have less hesitancy about going through with a purchase if they are able to pay with a method that they recognise and trust. Your ideal data-driven payment solution will strike the perfect balance between security and conversion, allowing your business to expand without exposing consumers to a level of risk that is unnecessary.
Look into whether your prospective payment partner has safety and security credentials recognised by the industry. Testimonials and reviews might also reveal red flags. How extensive their fraud prevention strategies are will indicate how important anti-fraud is to them as an organisation.
Ensure that you’re deploying the latest in data-driven technology
Modern technology allows us to automate many of the tasks that a human would’ve previously undertaken. This frees up a person’s time away from mundane administrative tasks, allowing them to concentrate on more meaningful activities. It also means that they are less prone to human errors as a result of fatigue.
Software using machine learning (ML) technology can monitor transactions being made in real-time, using sophisticated algorithms to help businesses spot signs of fraud, such as an inconsistency in payment data. This goes a long way to preventing fraud, with studies showing that ML-based security software boosts the average fraud detection rate.
Another simple action that you can take is to encrypt your transactions and email. This means that it will be next to impossible for anyone else to alter the information within the documents, drastically reducing the chances of it being used fraudulently.
Finally, you should also set up multi-factor authentication, which has been shown to reduce the chances of being compromised by an automated attack by 99.9%.
Make sure that your staff are adequately trained
Due to the efficacy of modern-day cybersecurity programs, most scammers now target the people in control of the machines in what are termed ‘social-engineering’ attacks. Simply put, this involves a fraudster using techniques such as deception to cause a person to share confidential information. With more than 95% of security breaches coming as a result of human error, it’s imperative for staff to have the adequate training needed to stop fraud.
Training could include using real-life examples to demonstrate how fraud occurs, and the signs to look out for. Your staff should also be well versed on your own internal fraud processes. For example, if your business chooses to ask for ID before accepting payment, you should make sure that your staff are trained to follow that process.
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Payment fraud is an issue confronted by businesses of all shapes and sizes, and changes to the way we live in a post-pandemic world could make it easier for scammers. However, there are many tools that you can use to fight back. By making sure that you properly train your staff in anti-fraud, use a reputable payment partner and utilise the latest technology, you’ll go a long way to protecting your business.