Payment fraud is getting smarter: Learn how to protect your business

Businesses today are increasingly vulnerable to a wide range of cyber threats, including payment fraud. As technology advances, so do fraudsters’ tactics. To stay ahead of these evolving threats, it’s important for businesses to understand the latest trends and adopt the necessary security measures to keep business safe.

The growing threat of payment fraud

Payment fraud has become a significant concern for businesses of all sizes. In fact, according to the Association for Financial Professionals, 80% of organizations they surveyed were victims of payments fraud in 2023. That’s a 15% increase from 2022. This uptick means businesses need to take proactive measures to protect themselves.

What are the common types of payment fraud?

Phishing attacks

Fraudsters send emails or messages that appear to be from legitimate sources, tricking recipients into clicking on malicious links or providing sensitive information. As highlighted by Forbes and based on a 3rd party Email Risk Security Report, 74% of account takeover attacks start with phishing.

Types of phishing attacks include:

• Email phishing: An attempt to steal sensitive information through email.
• Whaling: A highly personalized message targeting high-profile employees aimed to extract company information.
• Vishing: A phishing attempt made through voicemail or phone calls with the intent to sound like a reputable source in order to extract information.
• Spear phishing: Aimed to obtain sensitive information through public databases, such as email lists, social media, or even via text or phone call.

Malware

Malicious software can be used to steal sensitive information, such as credit card numbers and login credentials. The 2022 SiteLock Website Security Report found that, at any given time, 4.1 million sites are infected with malware.

Chargeback fraud

Chargeback fraud (also known as friendly fraud) occurs when a consumer makes a purchase, receives the goods or service, and then requests a chargeback from the issuing bank. The fraudsters dispute legitimate charges, claiming they didn’t authorize the transaction in order to essentially receive the goods or services for free. Juniper Research estimates that chargeback fraud cost businesses a staggering $20 billion in 2021.

Card-not-present (CNP) fraud

Card-not-present fraud are fraudulent transactions that occur without the physical presence of the card, such as online or over-the-phone purchases. This can happen when the fraudsters obtain the cardholder’s billing details, such as their name, billing address, card number, and security code or expiration date.

Fraudster tactics are getting more sophisticated

Fraudsters are becoming increasingly sophisticated in their tactics. They are using advanced technologies like artificial intelligence (AI) and machine learning to automate attacks and evade detection. Additionally, they are exploiting vulnerabilities in businesses’ payment systems and security protocols.

Tips to help keep your business safe

To protect against payment fraud, businesses must stay informed about the latest threats and adopt better security measures. Here are some key strategies:

• Employee education: Train employees to recognize and report phishing attempts and other fraudulent activities.
• Strong authentication: Implement strong authentication measures, such as multi-factor authentication (MFA), to protect access to sensitive systems.
• Regular security audits: Conduct regular security audits to identify vulnerabilities and address them promptly.
• Payment system security: Ensure that your payment systems are up-to-date with the latest security patches and best practices.
• Vendor due diligence: Conduct thorough audits on suppliers to assess their security practices and mitigate risks.
• Fraud monitoring and detection: Implement fraud monitoring tools to detect suspicious activity and take immediate action.
• Incident response plan: Develop a comprehensive incident response plan to address security breaches and minimize damage.

Leveraging technology to combat fraud

Technology can play an important role in combating payment fraud. Advanced solutions like AI and machine learning can help detect and prevent fraudulent activity by analyzing patterns and anomalies in payment data.

Virtual cards: A safer way to pay

Virtual cards can be a valuable tool in combating payment fraud. By using virtual cards, businesses can:

• Reduce the risk of card-not-present fraud: Virtual cards can be limited to specific vendors or transactions, reducing the risk of unauthorized use.
• Set spending limits: Set spending limits on virtual cards to prevent unauthorized charges.
• Track transactions in real time: Monitor card activity closely to detect suspicious behavior.
• Generate single-use or limited-use card numbers: For even greater security, single-use or limited-use card numbers can reduce the risk of misuse or inaccurate transactions.

The role of corporate payments in fraud prevention

The threat of payment fraud is a growing concern for businesses of all sizes. Corporate payment solutions can play an important role in mitigating the risk of payment fraud.

By staying informed about the latest trends and adopting proactive security measures, businesses can protect themselves from these evolving threats. Is it important that businesses leverage available technologies and implement best practices to strengthen their defenses against payment fraud.

For more insights and updates on corporate payments, check out:

• Your guide to virtual card rebates
• 2025 payment trends
• Is the secret to better cash flow management AI?

Learn more about how WEX payment solutions can be tailored to your business, so you can accelerate and streamline operations while creating lasting growth and success for your organization.

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The information in this blog post is for educational purposes only. It is not legal, tax or investment advice. For legal, tax or investment advice, you should consult your own legal counsel, tax, and investment advisers.

Sources:
Association for Financial Professionals
Forbes
Juniper Research
Investopedia