Combating online fraud in your small business

17 December 2012

How Can Small Businesses Protect Against Online Fraud?

It is a sad truth that fraud exists so long as individuals stand to gain and possess the means to deceive others. Small businesses should take even more care to protect against fraud than their large and medium-sized counterparts because small businesses have so little room for error. Although the Internet has presented small businesses with bountiful opportunities, those opportunities also come side-by-side with the ever-present threat of online fraud.

How Are Small Businesses Defrauded Using Online Means?

As it sounds, online fraud is a catch-all term for all fraud conducted through the Internet. For small businesses, most of the threat comes from the possibility of being defrauded by their customers making online purchases. However, small businesses should also take care to protect both their sites and their computer systems because there are always individuals interested in gaining unauthorised access. Compromised sites and systems can release confidential information to these individuals, be used to spread malware, and collect further information if not caught in time.

How to Protect Against Online Customer Fraud

Here are some tips and methods for protecting against customer fraud:

* The best procedures for protecting against customer fraud depends on the nature of the small business. For example, confirming the creditworthiness of customers might be a good idea if the business relies on a small number of big customers, but that might not be possible depending on the size of its clientele. In general, small businesses should focus their attention on irregularities in shopping orders. Examples include orders being spread across multiple cards, orders of unusual cost and size, and questionable or untraceable order information.

* There are a range of systems available to help small businesses check for customer fraud. For example, checking credit cards against the Industry Hot Card File can help catch individuals attempting to make their purchases using stolen credit cards. Similarly, automated address verification check the address claimed by the customer with that listed on the files of the credit card company while delivery tracking can be used to fight fraudulent refund claims.

* Having one person being informed about these practises is not enough. Under ideal circumstances, all of the small business’s employees should be familiar about methods used to detect and handle potential customer fraud, with those in sales receiving particular attention.

How to Protect Against Unauthorised Intrusion through the Internet

Here are some tips and methods for protecting against unauthorised intrusion through the Internet:

* For the most part, protecting against malicious outsiders is based on deterrence. Hackers are opportunistic, meaning that most focus their attentions on the most vulnerable systems. As a result, small businesses should take care to install protective software such as anti-viruses and firewalls, conduct regular scans of their systems using these software, and update their systems as soon as patches become available.

* Similarly, small businesses should take that their sites do not include glaring vulnerabilities in their coding. Bad design decisions, coding errors, and even human negligence can all cause sites to become compromised with terrible results. Depending on the importance of their sites, small businesses might want to consider hiring Certified Ethical Hackers (CEH) to test their sites for vulnerabilities so that the results can be used to patch them up.

* Do not neglect to educate the employees and secure physical documents. The simplest ways to get unauthorised access are often through a small business’s human resources and lost documents.


In short, the Internet abounds with both dangers and opportunities. However, small businesses can secure themselves against those dangers while remaining free to reap the opportunities so long as they are willing to put in the effort.

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