Online fraud isn’t just a concern for customers; it is also a concern for businesses. Learning more about internet fraud, the most common scams, and how to protect your business can do wonders for your bottom line. This article will help you do all those things, as well as offer a suggestion of a payment method that will give your customers more confidence.
What Is Online Fraud?
Online or internet fraud refers to using online software or services to take advantage of people. When most people think of fraud, they picture scams to steal money from people. But fraud comes in many forms and includes things like:
- Hacking
- Phishing
- Spoofing
- Ransomware
- Identity theft
- Data breaches
Common Online Fraud Scams and How to Spot Them
Knowledge is power, so it is important to learn about the different methods scammers use so you can figure out how to keep yourself—and your customers—safe. For example, once you know about phishing scams, you can add security features to your emails or remind customers you won’t ever ask for their login information for their bank account or even their account with you. Keep in mind that many of the following scams aren’t exclusive to the internet. Some can also occur over text messages, phone calls, and snail mail.
Property-Related Scams
There are various property-related scams. Vacation rental scams are one example. People will post fraudulent properties on a trusted website but ask for payment on a different app. Then, they keep the money and there is no rental. And since the transaction didn’t take place on the trusted website, there is no recourse through them.
Another common example is a real estate scam where a real estate agent’s email is hacked or spoofed. Homebuyers are asked to wire money before closing, but the account belongs to the scammer.
Bank-Related Scams
There is an entire category of banking-related scams, and many of them can take place online. A common scam that has been around for decades is the overpayment scam. Someone gives you a check to pay for something, but they overpay. They ask you to deposit it and wire them back the overage, but then the check bounces. This is especially common on online marketplaces.
Phishing emails pretending to be from a bank are also incredibly common.
Some companies will set up automatic withdrawals when you provide banking information to get a free trial or collect a prize you supposedly won. A similar example is a lottery scam that “just” requires you to send a processing fee.
Investment scams are yet another common type of scam. These promise high returns without any financial risk. But they either have a high risk or will blatantly steal your money.
Personal Scams, Including Grandparent/Grandchild Scams
These scams commonly target older generations who are less likely to see through the scam. The fraudster sends an email or message pretending to be the recipient’s grandchild. They claim to have an emergency and need money immediately.
Extortion
Extortion is when scammers demand money or threaten to complete some action. This could be a baseless threat of a hack, or it could be a ransomware attack where there is a real risk.
Counterfeits
One online scam that could hurt your reputation is if a scammer claims to sell your products, then gives customers a counterfeit. This is most common with pharmaceuticals and high-end items. It is also common for digital tickets for events, especially popular sporting events and concerts that are sold out.
Donations
Many scammers take advantage of kind hearts by asking for charitable organizations. They claim to be asking on behalf of a charity, but that charity doesn’t exist. This is especially common whenever a major crisis occurs. For example, there are currently many scams claiming to support Ukrainians in light of the Russo-Ukrainian War. There have also been various donation scams related to COVID-19.
Protecting Your Business (And Your Customers)
Many of the above online scams will target your customers and not necessarily affect you. But some may target your company or potentially hurt your business’s reputation if they pretend to be you. Keep the following tips in mind to keep your business and your employees safe.
Educate Employees and Customers
Even if some forms of fraud target your customers rather than your business, you can take action by educating the people who buy from you. Relationships are everything, and by going the extra mile to keep your customers protected, you show that you’re a brand that cares.
You should also make it a point to educate your team. Teach them what to look out for in phishing scams or payment scams. Scammers are constantly trying new tactics, so consider scheduling quarterly training sessions to make sure your employees are in the know about the latest strategies of attack.
Perform Security Audits
Get in the habit of regularly performing security audits. This will help you spot potential weak points that a cybercriminal could take advantage of. By patching those, you can reduce your risk of fraud.
Create a Password Policy
One of the biggest risks for your company is if a hacker gets into an employee’s account. You can mitigate this risk with a strong password policy. Require everyone on your team to use strong passwords that are harder to hack.
Safeguard Computers
In addition to a password policy, there are other basic things you can do to safeguard your computers and prevent fraud or cyberattacks, like using antivirus software and keeping all your programs and applications up-to-date.
Scrutinize Online Requests
Anytime you get a request made online, take the time to scrutinize it, especially if it seems unusual. This should be especially true for any request that conveys urgency. Scammers typically use urgency to prevent their victims from realizing it’s a scam. Avoid this by taking the time to confirm the facts.
Recognize Online Payment Fraud
You won’t always be able to recognize online payment fraud, but there are often warning signs. Payment fraud is especially important for small businesses because of their lower cash flow. Remember that payment fraud commonly appears as smaller transactions or repeated attempts, not always a single large transaction.
What About Text-to-pay?
Speaking of payment processing and payment methods, you can keep your business and clients secure by accepting secure methods, such as text-to-pay. When done properly, this is a highly secure method. And your customers will have confidence in text payments because you will send the link from the same number your business always uses to text them—you’re likely already saved as a contact in their phone.
Best of all, it is surprisingly easy to accept payments via text messages. You just need a simple SMS payment system that is intuitive for you and your customers.
As a bonus, text message payments can improve your customer experience and increase your on-time payments. After all, texts have a 98% open rate. This dramatically increases the chances that customers will see your payment reminder. It also increases the chances of them paying right away. This is especially true if you accept their preferred methods over text messaging, such as credit card payments. You can even set up recurring payments over your text message service.
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