How To Prevent Lost Revenues From Fraud

How To Prevent Lost Revenues From Fraud

Many small businesses continue to face multiple threats to their bottom line. Unfortunately, one of the largest threats facing many businesses today is that of fraud. While many people often think of fraud as something an employee commits, such as embezzlement, there are many other types of fraud that are not perpetrated by employees. Often, fraud is not perpetrated by employees or owners of a business but by the customers of the business. Fraud from customers can eat into a business’s revenues and profits significantly, especially if a large purchase turned out to be fraudulent. In addition to the damage customer fraud can cause a business, it is also usually more difficult to catch customers who commit fraud than it is to catch employees. This difficulty to prevent and catch customer fraud has led to many businesses implementing measures which may reduce fraud, but also can damage customer relationships.

A Better Way

One of the most common types of customer fraud is chargeback fraud. This type of fraud involves someone making a purchase with a credit or debit card and then claiming that the purchase was not made by the person who made it. The customer does this by contacting their cardholder, who then prevents the transaction from being completed or reimburses the customer the cost of the transaction. While this type of fraud is common and difficult to catch, there are multiple companies, such as Ethoca and others like it,  that have systems to aid in preventing this type of fraud. Many times, these companies utilize the data of the businesses they serve to gain an understanding of common fraudulent users and trends in fraud to help prevent fraud against the businesses that utilize their services.

Understanding The Cost

Businesses who are considering engaging a fraud prevention service should do a significant amount of research to better understand the costs and benefits of working with a fraud prevention service, compared to not working with one. For some businesses that operate in a low fraud risk environment, it could be best to not engage the services of a fraud prevention service while others, such as those with significant customer contact, could benefit significantly from the assistance of a fraud prevention service. A good way of starting this analysis is determining how much a business has lost to fraud in the past year and compare that to the cost of a fraud prevention service. This can provide significant insight into how much fraud is affecting a business’s revenues.

While fraud can be difficult to catch, it can be prevented through the appropriate measures.

Article written by admin

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