Credit card fraud is a serious and growing problem for all online merchants. But when trying to combat these cyberattacks, sometimes the things you don’t do are just as important as those you do. Let’s look at the most common mistakes small business owners make with their fraud management – so you can learn how to avoid them.
Of course, it certainly helps to educate oneself about the various fraud methods and red flags, and regular readers of this blog have hopefully picked up a few helpful tips to reduce online fraudulent transactions along the way.
Still, fraudsters are creative and aggressive, so it pays off to pay attention to these common fraud errors so you can make sure they don’t sabotage your own hard work.
1. Too-Strict Fraud Filter Settings
Given how pervasive fraud is these days, many small business owners prefer adopt the strictest possible fraud security measures. This may seem like a good idea and may indeed result in fewer fraudulent sales, but it will likely unfortunately lead to fewer overall sales as well.
Too-strict fraud prevention systems can lead to slow order response times, which may frustrate customers and cause them to abandon an order. Overly strict fraud filter settings can also produce high rates of false declines, in which legitimate sales are rejected because the fraud system spots something suspicious about the transaction.
The moral of the story? Setting up a system to reduce online fraudulent transactions is not unlike formulating a healthy diet plan: everything in moderation. Adjust your fraud filters to strike the proper balance between security for your transactions and convenience for your customers.
2. Red Flag Overreaction
In a similar vein, another common mistake occurs when small business owners put too much weight into one or two possible red flags without carefully assessing the big picture.
To be sure, it’s critical to pay close attention to things such as high order volumes, different shipping addresses and an uptick in international orders. But there are times when these “red flag” conditions may be present even for real transactions.
In other words, every order shipped to a P.O. Box is not automatically a sign of fraud. It simply means you have a potential red flag that you should analyze against the other details of the transaction to determine if anything is truly amiss.
The key here is to always be aware of how these individual factors may be a tip-off for fraud – but to not clamp down on every instance in which they arise without exploring other factors and conditions as well.
3. Domestic Bias
Statistics support the need for a healthy amount of suspicion when reviewing international transactions. However, some small business owners incorrectly assume that as long as most of their sales are domestic, they’re not a target for online fraudulent transactions.
Plenty of cyberattacks occur on the homefront as well, so don’t fall into the trap of oversimplifying your true risk. All U.S. sales are not good, and all international sales are not bad.
By all means, keep a sharp eye out for odd circumstances on your international orders. But pay just as much attention to irregularities with your domestic sales as well.
BONUS Mistake: Going It Alone
As a small business owner, you have more on your plate than just the important business of reducing online fraudulent transactions. So why not get some help? Contact us at email@example.com to learn how we can help make your online business more secure so you can focus on making it more profitable.