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Avoid ‘festive fraud’ this holiday season

With the holiday season being one of the busiest of the year for businesses, it unfortunately can be a time where scammers use this to their advantage. But how can SME businesses stay vigilant around ‘festive fraud’? We provide some tips for you to stay scam-savvy and decrease the risk of fraud in your business this peak holiday season. 

Firstly, a few key statistics on card fraud:

The Australian Payment Network’s 2021 Payment Fraud Report revealed that in 2020:

  • Card fraud rose by 0.6% to $467.6 million
  • Card-Not-Present (CNP) fraud increased by 3.8% to $418.9 million
  • Online card fraud now accounts for 90% of all fraud on Australian cards – up from 87% in 2019
  • As face-to-face transactions decreased during the pandemic and online shopping continued to accelerate, there was an uptick in Card-Not-Present (CNP) fraud

AusPayNet’s report also shows that criminal groups are turning their attention to making money from scams. The ACCC reports that Australians lost $851 million to scams in 2020, up 34% from 2019 figures.

Keep up to date with current scams

Scams come in various forms however, keeping up to date with current scams and training your staff to be able to determine them, will help to protect your business.

Social media scams are on the rise with schemes such as “Copycat” accounts and “Secret Sister” fraud becoming prevalent. Both of these scams trick the consumer into clicking on malware links, capturing their passwords, personal and sometimes bank details. Social media scams are expected to increase during the holiday season given consumers rely on social media to guide purchasing decisions and being online often, opens the door to scammer tricks.

It’s not just professional scammers you need to be aware of, unfortunately there are also consumers out there who claim packages never arrive and even falsely claim fraudulent charges on credit cards to receive a refund. It is important to stay vigilant and raise your concern if something doesn’t seem right.

Understand and minimise the risk of ‘chargebacks’

A chargeback is a reversal of a card transaction and usually occurs when a cardholder raises a dispute with their financial institution (also known as the Issuer) in relation to a purchase made with their credit or debit card. 

A chargeback may result in the amount of the original sale and a chargeback fee to be deducted from the merchant’s account. The reasons why Chargebacks occur may vary, however, they are generally the result of customer dissatisfaction with their purchase or because of unauthorised or fraudulent use of their card. 

To minimise the risk of chargebacks, best practices for avoiding them include: 

  • quickly processing refunds for your customers using the same card used for the original sale and avoid refunding via cash or another card
  • making sure your customer is aware of a cancellation or refund policy in writing and have your refund/ cancellation policy clearly printed on the transaction receipt and displayed clearly in store
  • using a clear trading name on your receipts that the customer will recognise
  • keeping records about the transaction and your customer, including email or other correspondence
  • obtaining signed proof of delivery and only charge the customer’s account when the goods are shipped. If a delayed delivery is required, wait to process the transaction until goods are shipped
  • verify the details of customers placing large or suspicious orders

Take MOTO payments securely

Any credit card transaction where the card and/or cardholder is not present poses a higher risk to your business. Mail Order/Telephone Order, also known as MOTO, is where payments are processed over the phone, email or internet. Being vigilant about unusual spending or behaviour can help you identify early warning signals that something may not be right with an order. 

To minimise card fraud, educate your staff to take these payments securely and so they know what to look for and ensure they ask for as much relevant information about the cardholder as possible. 

Keep an eye out for unusual transactions

Most business owners’ attention is focussed not only on the business but also family festivities and taking some much needed time off at some point during the busy season. Even though your business may be closed for public holidays throughout the Christmas / New Year period, it is important to stay vigilant and keep an eye on your transaction account as there are usually significant spikes in fraud during this time.

In regards to card fraud, if you are at all suspicious of a consumers’ transaction, ask for photographic identification (e.g. a driver’s licence or passport) and check that the details match the cardholder’s name appearing on the card. It is also wise to record the details on your copy of the printed transaction receipt.

Unfortunately, refund fraud through a merchant terminal can also be quite common which involves employees processing refunds (credits) to their own credit or debit card via your EFTPOS terminal. Essentially, this is removing funds from your business’ bank account and placing those funds into the employee’s account. Smartpay has put measures in place to help protect your business from this type of fraud including requiring a PIN number to process, however, ways to safeguard against refund fraud include strictly controlling access to your EFTPOS terminal, ensuring you change your refund password regularly and always balancing EFTPOS settlement and refunds to check for large refund amounts.

As scam types evolve, unfortunately so do fraudulent attacks on innocent consumers and businesses. Merchants need to keep ahead of the curve and educate themselves and staff on credit card fraud to continue to protect their business. By implementing our tips in this post, we hope you stay scam-savvy over this holiday season. 

For more information, you can download the Smartpay Merchant Chargeback and Fraud Prevention Guide from our website. 

Want to know more about surcharging?

If you’re keen to learn more about how surcharging on EFTPOS works, or what you could save, find out more about SmartCharge. To talk about how surcharging could work for your business get in touch with the team at Smartpay.