3rd March 2023

How Fraudulent Transactions Occur and How You Can Protect Your Assets

Payment fraud is a common issue around the world. In other words, it’s an illegal act committed by an online criminal.

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How Fraudulent Transactions Occur and How You Can Protect Your Assets

Payment fraud is a common issue around the world. In other words, it’s an illegal act committed by an online criminal. The online attacker will usually steal sensitive information from the victim, such as funds, personal property, or any other sensitive information the user has.

The worst part is that payment fraud is on the increase. It’s expected to grow even more in the future and as of now, it’s increasing by a rate of more than 130% yearly. Nevertheless, the EU participates in a significant percentage of worldwide fraud, so it’s not a small issue to address.

Your hard-earned money shouldn’t be given away that easily, so you must stay prepared if an attack occurs. Therefore, let’s dive deeper into this article to see how to protect yourself from online fraud.

The types of fraud that exist

Before we dive deeper into this article, let’s initially identify the types of fraud that can occur during transactions. Here are the most common methods of payment fraud:

Identity theft: The most common type of online fraud. This includes the online attacker stealing sensitive information, falsely claiming to be someone else.

Phishing: Websites or emails that ask you to input your personal information, such as bank account, credit card, or even login credentials, which give the upper hand to online attackers. The source that asks for this information will usually have a duplicate email address and usually will write emails with grammatical errors.

Pagejacking: Online attackers can redirect traffic from your website by falsely sending visitors to other websites. This other website might be a setup and contain harmful material that can steal IP addresses from visitors and do further damage. Not only does this harm your visitors, but it’ll also harm your business reputation in the long term.

Merchant or wire transfer fraud: Online attackers usually create a fake accounts, falsely charging credit cards and stealing their money. This will only damage the payment facilitator and make them accountable for all stolen money. Alternatively, there’s another way where online attackers will usually lie to users by falsely asking users for money or a credit card in return in the future.

8 Ways to protect your online assets

Incorporate a transaction monitoring software Every year, fraud is increasing and billions of dollars are lost. Stolen money can be used for numerous reasons and we are sure it’s not for any positive ones. It may range from financing terrorists, drug dealers, human trafficking and many other harmful actions.

Most companies have been advised to incorporate a transaction monitoring system for this particular case. Transaction monitoring software allows companies to prevent fraud by monitoring all transactions conducted, either periodically, in real-time, or blocking out suspicious transactions.

Transaction monitoring is mostly important for companies that are required to comply with anti-money laundering regulations, such as banks, wallet providers, credit institutions and more. In addition, the software assists you in avoiding Anti-money laundering (AML) fines, reducing payment fraud.

Pay close attention to your emails

Always stay vigilant of any email changes that may be made. This includes changes in financial data, links, attachments, or any other suspicious requests. Additionally, Gmail, Outlook and other email platforms might automatically send spam links to your spam folder, but always keep an eye out for suspicious links and unknown email addresses.

Above all, never forget to inform your team about this because you don’t want them to click on a link that’ll result in your sensitive data being lost.

Avoid sharing sensitive information on social media or your website This doesn’t only count for you, but also for your customers. It’s never too late to educate your team and customers about fraud, so let them keep their guard when sharing sensitive information on social media. Plenty of online scammers are waiting for the moment, and the bad news is that they are always on social media!

Therefore, if you see any message requests or links that come at you on social media, avoid them at all costs and make sure to block these users. Social media fraud isn’t widely spoken about, but roughly 25% of users experience it.

Nevertheless, it’s pretty common on the payment page on e-commerce sites, so make sure to optimize that as well. That’s precisely where most fraud occurs when payment information is included on social media platforms or your website.

Report fraud as much as you can

If you encounter any fraud, you can do good for everyone by reporting it immediately. Even if you aren’t an easy target, the next person might be and you could save someone’s financial life by reporting it. So where can you report fraud?

Fraud can be reported to the department of justice since it has a directory that can assist you in this part. Additionally, federal agencies will work together and forward your complaint to the right agency.

In case the fraud was in your local area, you can report it to the police or a local attorney. Furthermore, if you have any fraud losses, you can file an insurance claim to the police.

Use checks and balances to ensure you are in control You don’t want one person to control your finances because you never know what might happen. Internal fraud is possible too, so never rule it out.

Checks and balances can be created by requiring payroll and purchases to be checked by an authorized person. What more can you do to prevent these issues from occurring?

  • Tell your supervisors to approve timesheets before payroll is prepared
  • Don’t allow the same person to sign or write a check
  • Separate duties amongst each team member responsible for checks and balances
  • Use a stamp that says “For Deposit Only” and list them on a log before turning them in
  • Separate payable and purchasing functions to not mix them up
  • Separate all handling and record keeping functions

Learn more about your employees Companies can lose up to 5% of their annual income because of internal fraud. Sometimes, this occurs from a need for a better understanding of your team. Listening to and observing employees will help you discover fraud risks. Always take enough time to learn more about your employees; even though you can’t know them enough, knowing the basics is good enough.

Attitude changes can sometimes identify these types of risks. Nevertheless, it reveals internal issues that need to be corrected. Internal can happen for several reasons and some of them are:

  • When the employee lacks appreciation from the manager
  • The employee isn’t paid well enough and tries to steal the company’s finances
  • The employee isn’t paid overtime or works overtime for secret reasons
  • The employee doesn’t like anyone in the company and wants to take revenge on them

Internal fraud is a dangerous game and all of this occurs from numerous factors, but the primary one always involves a lack of appreciation. People might forget many things, but they won’t forget how you treated them.

Set up a reporting system

If your entire team knows what’s happening in the organization, it’ll significantly help you. People who want to commit fraud will know they are under surveillance and will avoid it. Honest employees won’t ever commit fraud and even report it whenever possible.

Since many employees still won’t report any incidents to their employers, you can consider setting up an anonymous reporting system. Employees can report fraudulent activity through their website and keep their IDs safe by using this anonymous feature.

Be careful when selling or buying anything online It’s easier to get scammed online because you can’t see the person or easily suspect if something is not right. This is especially true when you buy or sell on untrusted sites. Therefore, before you purchase or sell anywhere, read reviews about the website.

Countries across the EU get hit hard by fraud and the UK was one the hardest hit by fraud. Additionally, more than one million children get their IDs stolen each year too! These numbers are not relatively small and are something we should consider carefully.

The whole idea of avoiding fraudsters

You can’t see fraudsters, and the worst part is that sometimes, they might get to you when you least expect it. Therefore, it’s important to stay prepared and have your team be so. It’s difficult to deal with fraud, especially when running a business. It takes so much time to build a reputation but so little time to destroy it.

About The Author:

Tony Ademi is a freelance SEO content and copywriter. He has been in the writing industry for three years and has managed to write hundreds of SEO-optimized articles. Moreover, he has written articles that have ranked #1 on Google. Tony’s primary concern when writing an article is to do extensive research and ensure that the reader is engaged until the end.

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