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How Your Business Can Avoid Payer Fraud

29 April 2021

Did you know 9 in 10 companies recover less than half of their payment fraud losses?

Fraud will always be a risk, but it should never be accepted as ‘part and parcel’ of running a business. Here we address the importance of gaining and maintaining the correct payment details for your customers.

There are three common types of bank account errors which any business should be watching out for:

1. Customers amassing and defaulting on debt - by signing up for services under false bank account details. A customer signs up either with direct debit details of another individual or using completely false details altogether, only to vacate their residence 6 months later, leaving a significant amount of debt in their wake that the company has no way of tracking down.

2. Fraud from within the business - publicity mainly focuses on the risk to your company from fraudsters outside of your control, however, risk from within should also be considered. Where individuals can change a customer’s bank details, there will always be a risk, particularly where a large pay-out is due to an individual in the insurance and pension sectors.

3. It could just be an error - the customer or someone within your business could enter or update the bank account details incorrectly.​

£1m+ is the amount 1 in 5 enterprise businesses are losing to fraud annually

Such errors could impact your business in a number of ways:

1. Monetary loss - across businesses it costs millions of pounds to investigate and identify fraud.

2. Damage to your reputation - taking payments from incorrect individuals can lead to a lack of trust from consumers and even bring unwanted media attention, resulting in customers looking elsewhere.

3. Business survival - for a small business, losing money resulting from fraudulent activity could be critical; it may be the difference between operating one week and not surviving the next.

To help protect your business and customers, it is best practice and a business’s responsibility to verify that your customer’s bank account details are correct and associated with their name at the following key stages:

1. When a new customer signs up to your service.

2. Before making one-off payments to customers, whether that’s insurance, pensions, or credit pay-outs.

3. When a customer’s payment details change in your system, whether that’s an update from the customer or someone acting on their behalf.

Businesses without these measures in place will be the target of fraudsters.

If there’s anything that doesn’t seem quite right, report it to Action Fraud.

Talk to one of our experts today to see how we can help

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