![\"\"](\"/images/content/5b1/acfa192a3a4c9458b458e/300_-64-)
Most credit card fraud prevention features are designed for card-present (face-to-face) payment environments. With the shift to EMV chip cards, fraudsters have been turning their attention to card-not-present transactions (card payments made without physically swiping a card, such as for online payments) performed on online platforms or marketplaces.
\r\nWhen a person is a victim to identity or card theft, they can request their credit card provider (aka, the issuing bank) to work on their behalf to reverse the fraudulent charges. In the traditional online commerce model with a buyer and a single seller, the issuing bank would typically hold the seller or merchant liable for any fraudulent charges made on their website.
\r\nBut in the newer state of ecommerce (e.g., crowdfunding sites, niche marketplaces and particularly business tool providers) in which an online platform or marketplace combines many buyers and merchants, the specifics of the platform-merchant relationship will dictate who is exposed and liable. There are also situations emerging on these newer online platforms where fraudsters operate as merchants (rather than simply as buyers), with the aim of defrauding the platforms and quickly disappearing before the platform realizes what happened, leaving the platform on the hook for all fraudulent charges.
\r\nWhat can a platform do to protect themselves from fraudsters? And when should they start doing it? Here are five tips from WePay to help prevent the surprise and sting of fraud losses for these platform and marketplace providers.
\r\n\r\n\r\n1. Educate yourself
\r\nFraud and loss come in different forms such as chargebacks, merchant identity fraud, buyer identity fraud and merchant credit risk. Attacks can also come from fraudsters masquerading as legitimate buyers and sellers.
\r\n
For example, collusion fraud is a real threat for crowdfunding platforms. In this case, a fraudster creates a merchant account with a fake identity for a fake campaign, then creates fake customers who donate to the merchant with stolen credit card numbers. The fraudster then tries to pull out the money before legitimate credit card holders ever see or disputes the charges.
Awareness of these types of payment risks for you and your business is the first step in avoiding them.2. Start with simple protections
\r\nFor starters, you can leverage traditional, time-tested tools to prevent fraud. For example, you can validate data provided by users with information maintained by large vendors like Experian, Equifax or LexisNexis. These services can also check a user's business credit and history to further assess their legitimacy.
\r\n3. Verify with social data
\r\nWhile there are many advanced fraud protection tools out there for one to use, all tools can be enhanced and complemented by social data verification. With much of the world on social media platforms like Facebook and LinkedIn, there's a lot of available information that could be mined to validate someone's identity. It may be easy for a fraudster to set up a new social media profile, but it would be difficult for them to create one with a long history that also matches the name and email address they wish to fraudulently use.
\r\n4. Trust your instincts
\r\nWe've seen an old scam re-emerge on online business platforms whereby a fraudster posing as a potential client approaches a small business via email regarding a sizable project. The fraudster suggests that they want to pay for the project in advance, including an extra amount they want the small business to pay out to a third-party subcontractor (For example, they want you to build their website for $10,000, so they seek to pay you $15,000 and then you pay $5,000 to their \"photographer.\").
\r\n
The fraudster will say this approach is needed because they are limited in how many payments they can make. In reality, they are operating with a stolen credit card and trying to get you to send $5,000 to their bank before you realize the original $15,000 is fraudulent. Victims of this have often said that the project seemed too good to be true.
When it seems too good to be true, it probably is. It's safer to meet or speak with a prospective client before agreeing to any work. Be cautious if you find that someone wants to work with you from far away when they could work with many others much closer to their location. And, of course, you should be wary of any outreach that asks for money and/or personal information.5. Dont wait
\r\nFraud is highly nonlinear, making it inconsistent and unpredictable. Your business may experience zero fraud for weeks and then a sudden spike in fraudulent activity could overwhelm you before you can react. For this reason, you'll want to consistently monitor activity with the right tools even if the immediate threat isn't apparent.
\r\nThe most important takeaway is to avoid the element of surprise when it comes to fraud. If you're not on top of it, fraudulent activity can take time away from your normal business activities and can negatively affect profits, employee morale, and your business's reputation.
\r\n
We recommend that all businesses plan for fraud risks. For online platform providers, we believe it's even more crucial for them to ensure that their platforms remain a safe place to conduct business.
\r\n
Best Small Business Credit Card Processor - Helcim
\r\n\r\n
Best Processing Terms - Flagship
\r\nWhen you're looking for a credit card processing service, one feature you should insist on is a contract with month-to-month terms.
\r\n\r\n
Best Processing Rates - Fattmerchant
\r\nLooking for a solution for low card processing rates? Consider Fattmerchant to save the most per transaction.
\r\n\r\n
\r\n
\n","docType":"article","guid":"articles_7a34735aaa733b02115131f82e257fec","lastModified":"2017-08-28T22:04:00.000Z","published":"2017-08-28T22:04:00.000Z","structuredData":null,"subtitle":"5 tips to protect your business when dealing with payments","template":"legacy","title":"5 Ways to Protect Your Business From Common Types of Fraud","type":"article","author":{"avatar":null,"bio":"John Canfield is the VP of Risk for WePay. WePay provides payments as a service tailored for online marketplaces and platform companies that want to enable many end users to accept credit cards, without taking on the fraud risk and operational burdens associated with payments. WePay powers some of the top platforms including GoFundMe, FreshBooks, StayClassy, CustomMade, and hundreds more. Prior to WePay, John was Sr. Director of Risk at eBay.","name":"John Canfield","image":null,"slug":null,"social":{"facebook":"","linkedin":"http://www.linkedin.com/in/johncanfieldbayarea","twitter":"wepay","website":"https://wepay.com/"},"status":"enabled","title":null,"type":"Old BDC Member","user":{"imagePath":"https://staging.business.com/images/uploads/user/profile/2f363643d6144589e6aa6957518507e7d5b29.jpg","profile":{"company":"WePay","jobTitle":"VP of Risk","website":"https://wepay.com/"}}},"breadcrumbs":null,"channels":{"primary":{"name":"Business Basics","slug":"business-basics"},"sub":{"name":"Entrepreneurship","slug":"entrepreneurship"}},"meta":{"robots":"index, follow","description":"In today's ecommerce world, new forms of fraud emerge daily. Here are five tips to protect your business.","title":"Don't fall victim to fraud - business.com"},"parsedContent":{"toc":[],"json":[{"component":"p","children":["Most credit card fraud prevention features are designed for card-present (face-to-face) payment environments. With the shift to EMV chip cards, fraudsters have been turning their attention to card-not-present transactions (card payments made without physically swiping a card, such as for online payments) performed on online platforms or marketplaces."]},{"component":"p","children":["When a person is a victim to identity or card theft, they can request their credit card provider (aka, the issuing bank) to work on their behalf to reverse the fraudulent charges. In the traditional online commerce model with a buyer and a single seller, the issuing bank would typically hold the seller or merchant liable for any fraudulent charges made on their website."]},{"component":"p","children":["But in the newer state of ecommerce (e.g., crowdfunding sites, niche marketplaces and particularly business tool providers) in which an online platform or marketplace combines many buyers and merchants, the specifics of the platform-merchant relationship will dictate who is exposed and liable. There are also situations emerging on these newer online platforms where fraudsters operate as merchants (rather than simply as buyers), with the aim of defrauding the platforms and quickly disappearing before the platform realizes what happened, leaving the platform on the hook for all fraudulent charges."]},{"component":"p","children":["What can a platform do to protect themselves from fraudsters? And when should they start doing it? Here are five tips ",{"component":"a","props":{"href":"https://go.wepay.com/","rel":"nofollow"},"children":["from WePay"]}," to help prevent the surprise and sting of fraud losses for these platform and marketplace providers."]},{"component":"blockquote","children":[{"component":"h3","children":["1. Educate yourself"]},{"component":"p","children":["Fraud and loss come in different forms such as chargebacks, merchant identity fraud, buyer identity fraud and merchant credit risk. Attacks can also come from fraudsters masquerading as legitimate buyers and sellers.",{"component":"br"},{"component":"br"},"For example, collusion fraud is a real threat for crowdfunding platforms. In this case, a fraudster creates a merchant account with a fake identity for a fake campaign, then creates fake customers who donate to the merchant with stolen credit card numbers. The fraudster then tries to pull out the money before legitimate credit card holders ever see or disputes the charges.",{"component":"br"},{"component":"br"},"Awareness of these types of payment risks for you and your business is the first step in avoiding them."]},{"component":"h3","children":["2. Start with simple protections"]},{"component":"p","children":["For starters, you can leverage traditional, time-tested tools to prevent fraud. For example, you can validate data provided by users with information maintained by large vendors like Experian, Equifax or LexisNexis. These services can also check a user's business credit and history to further assess their legitimacy."]},{"component":"h3","children":["3. Verify with social data"]},{"component":"p","children":["While there are many advanced fraud protection tools out there for one to use, all tools can be enhanced and complemented by social data verification. With much of the world on social media platforms like Facebook and LinkedIn, there's a lot of available information that could be mined to validate someone's identity. It may be easy for a fraudster to set up a new social media profile, but it would be difficult for them to create one with a long history that also matches the name and email address they wish to fraudulently use."]},{"component":"h3","children":["4. Trust your instincts"]},{"component":"p","children":["We've seen an old scam re-emerge on online business platforms whereby a fraudster posing as a potential client approaches a small business via email regarding a sizable project. The fraudster suggests that they want to pay for the project in advance, including an extra amount they want the small business to pay out to a third-party subcontractor (For example, they want you to build their website for $10,000, so they seek to pay you $15,000 and then you pay $5,000 to their \"photographer.\").",{"component":"br"},{"component":"br"},"The fraudster will say this approach is needed because they are limited in how many payments they can make. In reality, they are operating with a stolen credit card and trying to get you to send $5,000 to their bank before you realize the original $15,000 is fraudulent. Victims of this have often said that the project seemed too good to be true.",{"component":"br"},{"component":"br"},"When it seems too good to be true, it probably is. It's safer to meet or speak with a prospective client before agreeing to any work. Be cautious if you find that someone wants to work with you from far away when they could work with many others much closer to their location. And, of course, you should be wary of any outreach that asks for money and/or personal information."]},{"component":"h3","children":["5. Dont wait"]},{"component":"p","children":["Fraud is highly nonlinear, making it inconsistent and unpredictable. Your business may experience zero fraud for weeks and then a sudden spike in fraudulent activity could overwhelm you before you can react. For this reason, you'll want to consistently monitor activity with the right tools even if the immediate threat isn't apparent."]},{"component":"p","children":["The most important takeaway is to avoid the element of surprise when it comes to fraud. If you're not on top of it, fraudulent activity can take time away from your normal business activities and can negatively affect profits, employee morale, and your business's reputation.",{"component":"br"},{"component":"br"},"We recommend that all businesses plan for fraud risks. For online platform providers, we believe it's even more crucial for them to ensure that their platforms remain a safe place to conduct business."]}]},{"component":"p","children":[" "]},{"component":"p","props":{"style":{"clear":"left"}},"children":[{"component":"picture","props":{"className":"alignleft thumb"},"children":[{"component":"source","props":{"srcSet":"/images/content/5b1/acfa192a3a4c9458b458e/300_-64- 300w, /images/content/5b1/acfa192a3a4c9458b458e/150_-32- 150w, /images/content/5b1/acfa192a3a4c9458b458e/75_-16- 75w","sizes":"(min-width: 870px) 150px, (min-width: 400px) 38vw, 38%"}},{"component":"img","props":{"src":"/images/content/5b1/acfa192a3a4c9458b458e/150-32-","alt":"","width":"150","height":"32","data-content-img-id":"5b1acfa192a3a4c9458b458e"}}]}]},{"component":"p","children":[{"component":"Link","props":{"href":"/reviews/helcim-credit-card-processing/","rel":"noopener external"},"children":["Best Small Business Credit Card Processor"]}," - Helcim"]},{"component":"p","children":[" "]},{"component":"p","props":{"style":{"clear":"left"}},"children":[{"component":"picture","props":{"className":"alignleft thumb"},"children":[{"component":"source","props":{"srcSet":"/images/content/5b1/ad00f1039eba5628b4582/300_-300- 300w, /images/content/5b1/ad00f1039eba5628b4582/150_-150- 150w, /images/content/5b1/ad00f1039eba5628b4582/75_-75- 75w","sizes":"(min-width: 870px) 150px, (min-width: 400px) 38vw, 38%"}},{"component":"img","props":{"src":"/images/content/5b1/ad00f1039eba5628b4582/150-150-","alt":"Flagship","width":"150","height":"150","data-content-img-id":"5b1ad00f1039eba5628b4582"}}]}]},{"component":"p","children":[{"component":"Link","props":{"href":"/reviews/flagship-merchant-services-credit-card-processing/","rel":"noopener external"},"children":["Best Processing Terms"]}," - Flagship"]},{"component":"p","children":["When you're looking for a credit card processing service, one feature you should insist on is a contract with month-to-month terms."]},{"component":"p","children":[" "]},{"component":"p","props":{"style":{"clear":"left"}},"children":[{"component":"picture","props":{"className":"alignleft thumb"},"children":[{"component":"source","props":{"srcSet":"/images/content/5b1/ad04292a3a4e6458b458c/300_-245- 300w, /images/content/5b1/ad04292a3a4e6458b458c/150_-122- 150w, /images/content/5b1/ad04292a3a4e6458b458c/75_-61- 75w","sizes":"(min-width: 870px) 150px, (min-width: 400px) 38vw, 38%"}},{"component":"img","props":{"src":"/images/content/5b1/ad04292a3a4e6458b458c/150-123-","alt":"Fattmerchant","width":"150","height":"123","data-content-img-id":"5b1ad04292a3a4e6458b458c"}}]}]},{"component":"p","children":[{"component":"Link","props":{"href":"/reviews/fattmerchant-merchant-services/","rel":"noopener external"},"children":["Best Processing Rates"]}," - Fattmerchant"]},{"component":"p","children":["Looking for a solution for low card processing rates? Consider Fattmerchant to save the most per transaction."]},{"component":"p","children":[" "]},{"component":"p","children":[" "]},{"component":"p","children":[" "]}]},"resource":null,"sponsorship":null,"thumbnail":{"path":"https://staging.business.com/images/content/59a/483dd1039eb01578b456a/1500-0-","caption":"Brian A. Jackson/Shutterstock","isBlurred":true},"bestPicks":null},"related":{"relatedArticles":[{"title":"Fraud is Now a $5.5B Business—Are You at Risk?","canonical":"https://www.business.com/articles/fraud-is-now-a-5-5b-business-are-you-at-risk/","slug":"fraud-is-now-a-5-5b-business-are-you-at-risk","thumbnail":"https://www.business.com/images/channel/business-basics.jpg","dek":"Staying Ahead of Fraudulent Transactions and Losses","lastModified":"2015-06-22T16:00:00Z","published":"2015-06-22T16:00:00Z","sponsored":false},{"title":"Resources for Veteran-Owned Businesses","canonical":"https://www.business.com/articles/resources-veteran-owned-business/","slug":"resources-veteran-owned-business","thumbnail":"https://www.business.com/images/content/5b7/425da51ee47e7568b458a/1500-0-","dek":"How to start a business, find funding and gain customers as a veteran business owner.","lastModified":"2018-08-15T12:01:00Z","published":"2018-08-15T12:01:00Z","sponsored":false},{"title":"Resources for Business Owners with Disabilities","canonical":"https://www.business.com/articles/resources-business-disabilities/","slug":"resources-business-disabilities","thumbnail":"https://www.business.com/images/content/5c5/9c8c97b43743d098b4571/1500-0-","dek":"Connect with dozens of government programs and resources to make your dream a reality.","lastModified":"2019-02-06T12:45:00Z","published":"2019-02-06T12:45:00Z","sponsored":false},{"title":"SBA Loan Default: A Complete Guide for 2020 and Beyond","canonical":"https://www.business.com/articles/sba-loan-default-guide/","slug":"sba-loan-default-guide","thumbnail":"https://www.business.com/images/content/5dc/047af7b437483068b4572/1500-0-","dek":"Here's comprehensive guide to all your questions about SBA loan default, forgiveness and the SBA Offer In Compromise.","lastModified":"2019-11-04T15:00:00Z","published":"2019-11-04T15:00:00Z","sponsored":false},{"title":"Turn Your Genealogy Hobby Into a Side Business","canonical":"https://www.business.com/articles/turn-genealogy-into-business/","slug":"turn-genealogy-into-business","thumbnail":"https://www.business.com/images/content/5db/9c9f37b4374674d8b4581/1500-0-","dek":"Learn how to turn your genealogy hobby into a home-based business.","lastModified":"2019-05-01T12:00:00Z","published":"2019-05-01T12:00:00Z","sponsored":false},{"title":"13 Things I've Learned in 13 Years as a Business Owner","canonical":"https://www.business.com/articles/13-lessons-learned-in-13-years-smb-owner/","slug":"13-lessons-learned-in-13-years-smb-owner","thumbnail":"https://www.business.com/images/content/5e6/2ae619c658aeb6a8b457a/1500-0-","dek":"An entrepreneur recounts the top 13 lessons learned over the last 13 years as CEO of an online business.","lastModified":"2020-03-06T20:15:00Z","published":"2020-03-06T20:15:00Z","sponsored":false},{"title":"Inspiration Revealed: 36 Top CEOs Share Their Secrets to Success","canonical":"https://www.business.com/articles/inspiration-revealed-36-top-ceos-share-their-secrets-to-success/","slug":"inspiration-revealed-36-top-ceos-share-their-secrets-to-success","thumbnail":"https://www.business.com/images/channel/business-basics.jpg","dek":"Thirty-six top leaders share their secrets to success in a variety of business aspects. Get ready to be inspired!","lastModified":"2015-11-02T18:00:00Z","published":"2015-11-02T18:00:00Z","sponsored":false},{"title":"Legends Among Us: 6 Lessons from Great Influencers of the Past and Present","canonical":"https://www.business.com/articles/6-lessons-learned-from-great-influencers-of-the-past-and-present/","slug":"6-lessons-learned-from-great-influencers-of-the-past-and-present","thumbnail":"https://www.business.com/images/channel/business-basics.jpg","dek":"Looking for solid business advice? Take a look at what the work of some of the greatest artists and influencers of all time can teach you.","lastModified":"2016-02-22T22:00:00Z","published":"2016-02-22T22:00:00Z","sponsored":false},{"title":"The Entrepreneur's Road Map: 11 Steps to Success","canonical":"https://www.business.com/articles/entrepreneur-road-to-success/","slug":"entrepreneur-road-to-success","thumbnail":"https://www.business.com/images/content/5d1/52bd39c658a99508b457a/1500-0-","dek":"So you've decided to start a business. What exactly do you need to do?","lastModified":"2018-08-09T07:00:00Z","published":"2018-08-09T07:00:00Z","sponsored":false},{"title":"The Roadmap to Start a Membership Site From Scratch","canonical":"https://www.business.com/articles/starting-a-membership-site/","slug":"starting-a-membership-site","thumbnail":"https://www.business.com/images/content/5d8/96af85a215e42018b4588/1500-0-","dek":"Do you want to create an informative, engaging subscription site with a loyal member base? There are some specific steps you'll need to follow.","lastModified":"2019-09-25T13:00:00Z","published":"2019-09-25T13:00:00Z","sponsored":false},{"title":"Building Blocks to Success: 8 Steps to Finding Your Strengths As An Entrepreneur","canonical":"https://www.business.com/articles/8-steps-to-finding-your-strengths-as-an-entrepreneur/","slug":"8-steps-to-finding-your-strengths-as-an-entrepreneur","thumbnail":"https://www.business.com/images/channel/business-basics.jpg","dek":"It's hard to know what you're good at, without years of experience. Here's the process to finding your true strengths as an entrepreneur.","lastModified":"2016-03-31T20:00:00Z","published":"2016-03-31T20:00:00Z","sponsored":false},{"title":"How to Make Money in Retirement: A Guide to Turning a Hobby into a Side Business","canonical":"https://www.business.com/articles/how-make-money-retirement-hobby/","slug":"how-make-money-retirement-hobby","thumbnail":"https://www.business.com/images/content/5ba/902e01039eb26648b4572/1500-0-","dek":"Many retirees turn side interests into income. Learn how to make money in retirement.","lastModified":"2018-09-24T15:03:00Z","published":"2018-09-24T15:03:00Z","sponsored":false}],"relatedReviews":[{"doc_type":"category","thumbnail":"https://staging.business.com/images/rz/5db752e25a215e277d8b4588/Invoicing_AndreyPopov_BDC.png","canonical":"https://staging.business.com/categories/best-collections-agency-services/","title":"The Best Collection Agency Services of 2021","dek":"We've reviewed the best collection agency services for 2021. See up-to-date comparisons on features and the best prices for the top-rated agencies.","slug":"best-collections-agency-services","lastModified":"2021-03-17T16:34:00Z"},{"doc_type":"category","thumbnail":"https://staging.business.com/images/rz/5e4edd837b437442548b456d/cash_Dutko_getty.jpg","canonical":"https://staging.business.com/categories/small-business-loans-and-financing-options/","title":"The Best Business Loan and Financing Options of 2021","dek":"Many small businesses need funding to get started. Learn about the different financing options to decide which would work best for your small business.","slug":"small-business-loans-and-financing-options","lastModified":"2021-03-11T17:24:00Z"},{"doc_type":"category","thumbnail":"https://staging.business.com/images/rz/5d4c65367b43741a258b4572/Laptop_Sfio_Cracho.png","canonical":"https://staging.business.com/categories/crm-software/","title":"The Best CRM Software of 2021","dek":"Looking for the best CRM software? We have easy-to-read, expert unbiased reviews and feature comparisons of the best and cheapest programs.","slug":"crm-software","lastModified":"2021-02-24T14:09:00Z"}],"relatedSponsoredArticles":null}},"pageContext":{"displayModified":"2017-08-28T22:04:00.000Z","template":"legacy","title":"5 Ways to Protect Your Business From Common Types of Fraud","meta":{"robots":"index, follow"},"docType":"articles","slug":"dont-fall-victim-to-fraud","canonical":"https://staging.business.com/articles/dont-fall-victim-to-fraud/","skipTOC":false}},"staticQueryHashes":[]}
![\"Flagship\"](\"/images/content/5b1/ad00f1039eba5628b4582/300_-300-)
![\"Fattmerchant\"](\"/images/content/5b1/ad04292a3a4e6458b458c/300_-245-)