We read stories all the time about online credit fraud. But something that is perhaps not made clear uis that it is small businesses that are suffering the most.
You only have to look at statistics about the size of the SME market to understand why SMEs are targeted by fraudsters. And many are an easy target.
This is a stark reminder to SMEs to seek advice about securing their online businesses.
Warwick Ashford, Computer Weekly’s security expert, writes:
Small firms are being stung by fraudulent online credit card transactions because of the complexity of the process and lax security, according to the Forum of Private Business (FPB).
FPB member Stuart Mayhew is the Managing Director of North Leicester Motorcycles, a motorcycle dealer in Coalville, Leicestershire. He says his business takes approximately 90% of all payments via cards.
“I’m appalled that card suppliers are allowed to retrospectively snatch back payments,” says Mayhew. “If you apply for authorisation and get it and the money is in your bank it’s just terrible that they can come back and say ‘sorry, we shouldn’t have authorised that but we are taking the money back’.”
Greg Smith is also a member of the FPB. His firm Fag Machines, which is based in Manchester and has offices in Bury St Edmunds, Suffolk, and Southend-on-Sea, Essex, lost £243,000 after his card payment provider removed the money from his account following a fraud. He had put in place the provider’s security system.
“We made it clear that any payments we take are card holder not present and were told that it would be entirely our risk,” says Smith “I think the security checks are as good as non-existent – we’re charged 30p per transaction as well. I understand that other providers use some of that fee for fraud protection so and information and advice about alternative providers is obviously welcome.
“There is definitely a need because more and more businesses have to trade via the internet and we’re forced to take on card processing facilities. The banks say they are the best thing since sliced bread and then say it’s not their problem when something goes wrong.”
Another member of the FPB, Brian Murphy, of Buckinghamshire-based electricity company Pulsar Developments, said that the most security conscious firms have no guarantee of being covered in the event of fraud, even when the cardholder is present when payments are made.
“I asked the provider if they would guarantee that I would be paid in the event of a fraud, providing I had carried out all the security checks required,” says Murphy “After about three days, the answer that came back was ‘no’. These lenders are selling a system that they are not prepared to stand by.”
“It also applies to debit cards. As far as I am aware, none of them provide a guarantee of payment yet reserve the right to pass back the charges, at their discretion, if fraud takes place. That is not my problem, but a problem with their system. Unfortunately, they won’t volunteer any of this information easily to their business customers,” he says.
SMEs that do not want to miss out on online transactions as a source of revenue should ensure they seek out independent advice on all areas of card processing and information on a choice of processing banks and e-commerce payment gateways before committing themselves. Otherwise, they could also end up getting burned.