Don’t you sometimes wish to go back to the time when things were simple?
Or at least simpler than today?
Everything was analog, and even though running a business was equally stressful, you didn't have to be a tech specialist to keep it going.
Cash was the currency everybody used, and even though fraud could happen, it was simpler to detect and prevent it.
But the downside–you didn’t have all the commodities you have now as an online business, plus your business growth was a lot slower. Well, as they say: every progress has its price and fighting online fraudulent activities is one of them.
If you want to keep your business expanding and heading in the right direction, implementing a fraud prevention strategy is the right solution.
In this article, we’ll explain why you should start strategizing to detect fraudulent activities.
But first, let's define some terms we’ll be using here: fraud prevention and fraud detection.
Let’s see what differentiates them.
Fraud prevention or fraud detection—what comes first?
By definition, fraud prevention is a process or set of measures that you’re conducting to protect your business and your clients from any fraudulent activities.
It’s a set of measures, such as stricter control over your payments and clients or introducing your employees to possible fraudulent activities, which means you should have a certain plan or strategy to make sure all the security measures are implemented in the best way.
And, as you probably guessed, prevention should come first.
Fraud detection refers to the processes or tools that help you spot fraud.
Since most frauds are involved in financial transactions, your goal is to make sure your clients feel safe when doing business with you. That’s where you put those tools into action.
In practice, fraud prevention and detection intersect. You do need a good strategy, but without good detection tools, your strategy doesn’t mean a lot.
Fraud prevention strategy: What you’ll need to know
To build a successful anti-fraud prevention strategy, you’ll have to gather all your resources and make a solid plan. Keep in mind that this is a perpetual process, meaning that all the malicious personas out there are continuously learning how to beat your system.
I know, who has that amount of time and energy--why not put it into some legal and honest business? Well, that is the million-dollar question.
But now you’ll be one step ahead. You and your employees.
Keep in mind simplicity. You don’t want to overdo it and have your customers journey through a complicated identification process–they won’t stay your customers for long if that’s the case.
Nobody likes to waste too much time on simple things like logging in. We all know that it's client satisfaction that keeps your business moving forward.
Here we’ll discuss some areas where your business needs a robust fraud prevention strategy.
Comply with regulations for global protection
With the rise of online businesses, there are more chances to commit fraud every day.
That is if you’re a criminal.
That’s why the government and regulatory organizations had to start implementing more stringent laws to save consumer privacy and guarantee data security.
So, businesses are now required to comply with many data protection laws and standards.
It means you have to start applying at least some of the fraud prevention methods because the law says so.
One of the regulations that protect government assets and fight against crimes is the anti-money laundering regulation (AML). This is a mandatory and very useful regulation if you are a bank or an online payment system owner, but its use can benefit various businesses.
If you’re doing your business online, it would be good to protect yourself from being involved in any illegal money transfers, wouldn’t it?
Transaction monitoring in AML: To better explain how transaction monitoring in AML works, let’s start with some process definitions.
AML is a set of laws and regulations used to prevent financial crimes and illegal money transfers.
Through AML transaction monitoring, you can detect and stop any suspicious money transactions and report them to authorities for further investigation.
It’s done with simple action, such as using AML software and tools. With that, you can monitor money transactions that are over a certain amount and alert authorities before you accidentally get involved in this suspicious activity.
It’s not obligatory yet for all businesses, but it can mean a great deal to your business not to be connected in any way with illegal money transactions, for the sake of reputation and unnecessary problems with the law.
It is mandatory for any organization or business that is under the authority of money laundering regulations, such as banks or payment systems (as we mentioned before).
Secure your company’s finances
One of the most obvious reasons for making a fraud prevention strategy is to make sure your business finances are secured. After all, it’s the finances that keep you and your business going. And growing. In today's online business world, online payments are integrated into all business segments, making them easy prey for online predators.
If you don’t prepare for such a fight, you’ll probably be caught and eaten, and you'll lose a lot of your funds. The most important part of this fight is to detect the predator on time, so you don’t lose so much or don’t lose anything at all.
Detecting payment fraud: In all your fraudulent battles, the most important question is: how do you detect payment fraud?
The detection and prevention of payment fraud is a complicated problem that calls for a constantly evolving method for gathering all the possible solutions.
This means there are a lot of ways you can get scammed, and there are also many ways you can fight against the scammers.
For example, the most common ways to get scammed include:
Business email compromise
To detect these on time and to fight against them, try this:
For online transactions, you can use the address verification service (AVS) and the card verification value (CVV) checks.
Start using strong data security measures like encryption or limited access.
Educate your employees on how to recognize questionable transactions and emails.
Implement AI learning machines and software to spot suspicious online behavior even faster.
Communicate on the subject with law authorities and your business partners.
The best way is to educate yourself and your coworkers and to be prepared to react as quickly as possible.
Keep your good name
We all know that your business's reputation is your brand. It’s maybe even more important than anything else. If you lose your credibility, it’s potentially the worst thing that can happen to you. In today’s world of social networks, good news travels fast, but bad news travels even faster.
So, you, as a good business owner, have to protect your good name at all costs. After all, it took you a good amount of time to build it. Also, with a secure online business, you’ll gain more trust from current and potential clients. Start planning your fraud prevention strategy right now and build your way to a high-player league.
Retain happy and loyal clients
The very foundation on which your business reputation and success will grow is your clients. If they have a good experience doing business with you, they'll stay loyal, and as we mentioned before, due to the power of social networks and word of mouth, your reputation will skyrocket. If you show your clients that you care for them by keeping their personal information safe, you can count on their loyalty.
Include them in your fraud prevention strategy by informing and educating them on the subject; that way, you’ll represent yourself as a responsible and caring business while your fraud prevention strategy works smoothly.
Run an efficient business
To be successful in business requires a lot of work and good organization. That’s why it’s important not to have any unnecessary distractions. For example, not to be disrupted by fraudulent activities.
Your employees can stay effective and focused on their core activities.
It’s finally time to protect your business
All this talk brings us down to one answer: this is a necessity and not a commodity in today's world. Any business that ignores this will pay a much higher cost in the end.
Just a reminder of what you have to be aware of: frauds are happening right now, all over the internet. Some offenders get caught, but many of them get away with their crimes.
Do you want your business to be easy prey, or are you willing to do what it takes to protect it? And your clients with it. Also, keep in mind the regulations that are here for good reason.
This is just the beginning of the online business era, and one way or another, you’re going to need to be able to keep your business running smoothly and effectively.
Why not start now and be prepared for the future?