Our top picks of timely offers from our partnersMore details
While the world is on high alert for any new information surrounding the coronavirus pandemic, business owners will want to pay just as much attention to credit card hackers.
The costs of fraudulent transactions can eat away at any business owner's balance sheet — even during good months.
But it's even more undesirable to pay the price of fraud during a global pandemic.
Below, CNBC Select spoke to Kevin Lee, digital trust and safety architect at Sift, a San Francisco-based software security company, about what small businesses should look out for when detecting payment fraud.
In 2019, just over half of payment fraud was attempted via mobile devices, a contrast to previous years in which mobile purchases were thought to be targeted less frequently, according to Sift.
This means that bad actors are "going on to e-commerce sites on their phones and buying goods with stolen payment info or credentials," Lee says.
And fraudsters aren't always using credit card transactions to do so. They are looking to other payment types like digital wallets (PayPal, Apple Pay, Google Pay, Samsung Pay) and gift cards.
The coronavirus pandemic may further excel these types of purchases.
"As we will likely see sharp increases in physical e-commerce transactions due to social distancing, fraudsters have been and will continue to take advantage of the increased volume by trying to slip by unnoticed using a variety of payment types," Lee says.
There's been a steady uptrend in fraud with the rise of digital commerce, and a drastic jump in recent years. But the risk of fraud is now even greater with quarantined people turning to online platforms more than normal.
"Year over year, attempted online payment fraud increased 73% in 2019," Lee says. And he expects to see that grow even more because of coronavirus.
But any business owner making sales online should stay on the lookout. This is true for both digital e-commerce businesses (selling electronic services and products such as gift cards, online dating subscriptions, electronic tickets and online courses) and physical e-commerce businesses (selling tangible goods and products like clothes, merchandise and household items).
Be wary of online orders consisting of big-ticket items that may have a high resale value.
"Online thieves tend to swing for the fences, rather than trying to purchase low-priced items across many different sites," Lee says.
Lee says that the average fraudulent transaction Sift saw last year was three times greater than the average legitimate transaction.
"Shockingly, the most expensive item that a fraudster tried to buy was a video game power-up and tried to pay $1 million for it," Lee says. "Apart from that, the most valuable items they tried to buy were high-end luxury watches."
There is no doubt that credit card fraud can be damaging to both consumers and business owners alike. But while consumers are often protected against any fraudulent purchases made on their credit cards, businesses are left to cover the cost of those transactions, as well as possible chargeback fees.
And now, more than ever, is a particularly important time to pay attention.
"As COVID-19 shifts the commerce landscape across the globe, some businesses and fulfillment types are going to see huge increases," Lee says.
Recent evidence of this includes companies encouraging consumers to buy online, pick up their purchases in-store or get on-demand delivery so as to not lose business during this uncertainty.
"Cybercriminals are well aware of this," Lee says. "We will see fraudsters continue to move their operations online and look for new ways to take advantage of stolen payment information and credentials.
"The good news for online businesses," he says, "is that by paying attention to trends, understanding what signals to look out for and using the right technologies, they can mitigate fraud risk and continue to enable legitimate purchases."
For merchants, that may mean having a fraud protection platform in place, such as an Address Verification Service (AVS), to confirm the cardholder's billing address with the respective card issuer.
And if your business accepts other payment types, "pay extra attention to orders that don't involve credit cards and remember you can contact the buyer to make sure the order is legitimate," Lee says.
- New Google Pay app update offers more ways to pay, save and get insights into your money
- 5 steps to take immediately if your credit card is lost or stolen
- How to choose a business credit card
- This business credit card helps you manage your short-term cash flow
- 3 tips for using a business credit card during the coronavirus pandemic