By Michael Ault
UTP Group
Editor's Note: A version of this article was previously published by Finextra.com on Sept. 16, 2021. Copyright © by UTP Group. Reprinted with permission.]
Though it might have been hoped a decade ago that technological advances by the 2020s would have all but wiped out the threat of fraud, this is not the case. Fraud isn't just on the rise; it's reaching levels not seen before.
Indeed, 2020 holds the record for being the worst year to date for breaches with over 36 billion data records compromised, according to a recent Risk Based Security survey. In this article, I'll look at a new type of fraud on the rise and general steps to take to protect your business.
A weak link in the protective chainmail surrounding POS devices isn't in the technology but rather in user attitudes. Traditional cash tills, with their spring-loaded money trays and familiar dinging noises, often command a different level of respect, with cashiers demonstrating a higher level of vigilance around physical cash than they do around card-acceptance devices.
Likely because there are no physical assets being transferred when operating a card machine, cashiers allow a degree of complacency, and fraudsters are capitalizing in a number of ways.
So impressive has the evolution of payments technology been in recent years, it is hard to believe that a simple sleight of hand known as distraction fraud is harming so many small and midsize enterprises (SMEs).
With this type of fraud, a scammer distracts a cashier with idle conversation while an accomplice commandeers the payment terminal and begins authorizing refunds to an account. Not only is it often days later that SMEs realize what's happened, but these "refunds" also have been known to run into the thousands (for an example, see www.mirror.co.uk/money/shop-owner-left-out-pocket-16159962).
The method just described represents only one way fraudsters are hurting SMEs. Though completely eliminating the various threats may never be possible, there are practical steps businesses can take to protect themselves:
Michael Ault is chief executive officer of UTP Group, a payment solutions company with over 30,000 clients in the UK, Republic of Ireland and Gibraltar. For more information, visit www.utpgroup.co.uk.
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