Starting a new business can be an exciting venture. Whether you’re running a small business or an indie business as a sole trader, there are more opportunities than ever to get out there and reach a large audience. The audience you’re reaching, however, will not always be good.
That is to say, there are a number of malicious entities that are likely to come across your business at some point in its lifetime. These are entities who will work to take advantage of any vulnerabilities and attempt to exploit your business for their own gain.
According to a recent study, the total amount lost due to financial scams in 2023 amounted to around $485.6 billion. When it comes to payment fraud, specifically, the number was nearly $50 billion, meaning it accounted for approximately 10.3% of the total amount lost.
But it’s not just payment fraud you have to worry about as a new business. To help you get to grips with the global problem – and put in the necessary steps to protect your business – we’ve listed out the seven most common types of fraud and how they work.
Payment Fraud
We will, however, start with payment fraud, seeing as it has been one of the most common types of fraud over the last few years. This involves making unauthorised transactions using stolen or fake payment information.
There are two different types of payment fraud: CNP fraud and CP fraud. CP fraud typically involves using stolen or cloned cards in physical transactions, while CNP fraud occurs when stolen credit card information is used for online transactions. Some of the best ways to defend your business against payment include implementing 3D Secure authentication, using encryption and tokenisation for payment data, and monitoring transactions for any unusual patterns.
Phishing Attacks
We mentioned there that CNP fraud occurs when credit card information is stolen, but it’s important to note exactly how that information is stolen. One of the most common ways sensitive information is given is through a phishing attack, where a fraudster will pretend to be a trustworthy entity through emails, texts, or fake websites.
The goal here is to trick individuals or businesses into revealing data and financial information, and the techniques are only getting harder to spot. In order to prevent this from happening to you or your customers, it’s important to educate employees about recognising the attempts, use email filters, and always make sure to implement two-factor-authentication for sensitive accounts.
Account Takeovers
Account takeovers occur when fraudsters gain unauthorised access to a legitimate user’s account, using that account to make unauthorised transactions or steal personal information. They do this by hacking your network and utilising the data they have on file.
This, of course, can be particularly dangerous to your business, as it can lead to significant financial losses and a loss of customer trust. When an account is compromised, fraudsters can collect as much client data as they want, so it’s up to you to do as much as possible to ensure your networks are protected. This can be done through firewalls, MFA, and applying regular security updates to ensure you’re equipped with the latest patches.
AI Fraud
Another evolving fraud technique is known as ‘AI fraud’, which involves the use of artificial intelligence to automate and enhance attacks. One of the most well-publicised scams in this instance is known as a ‘deepfake scam’, where AI-generated deep fakes are utilised to impersonate individuals and trick companies into accepting fraudulent payments.
Automated phishing is also becoming a big issue, with AI being used to craft thousands of personalised phishing emails every day. While this technology is fairly new, there are already counter-measures you can implement. These include using advanced fraud detection tools that similarly leverage AI, implementing robust security protocols for machine learning systems, and ensuring to remain informed about emerging AI-based threats.
Fake Ads
Lastly, one of the most damaging techniques used by fraudsters is the creation of fake ads – fraudulent advertisements that mislead users into purchasing goods or services that don’t exist. These ads can appear on websites, social media platforms, or search engines, leading to phishing sites designed to steal their information. In order to get around this, it’s important to educate consumers about spotting fake ads and reporting them when you see them.
Your website can be a good tool, here. In order to boost Google rankings, many businesses in 2024 have blogs that regularly upload content, but this content doesn’t always have to be directly linked to your products. Instead, you can spare a few articles to discuss cybersecurity and fraud, and in this case, how to verify the authenticity of advertisers and platforms, and which ad verification tools are best for detecting them. Not only will this be useful for your consumers to know, but it will also help you to engage with them more and present your business as an educated, trusted, and reliable platform.
To read more content like this, explore The Brand Hopper
Subscribe to our newsletter
