As is often said, most crimes are crimes of opportunity.
And this is bad news for small businesses. Small and medium-sized businesses are often unprepared for fraud schemes and scams due to lack of resources and challenges in obtaining financing. Especially given the toll that innovations like artificial intelligence (AI) are having on bad actors.
“If you're a large company, you may have tools built in-house to prevent fraud and scams, but smaller companies are usually less sophisticated.” mike renbergerSenior Vice President, North America, Chief Risk Officer visasaid PYMNTS CEO Karen Webster.
With the use of generative artificial intelligence (GenAI) and other emerging technologies, fraud is becoming more convincing than ever, resulting in unprecedented losses for consumers. Lemberger highlighted the emergence of a “triangulation fraud” scheme, a complex process in which scammers set up fake girlfriend websites. We offer high-demand products at deeply discounted prices.
An unsuspecting buyer enters their payment credentials, lured by the promise of a deal, and the scammer then uses the stolen credentials of another victim to disguise the genuine article. purchase products. While the buyer receives the item, unaware of the illegal process behind the transaction, fraudsters could profit from the price difference and use the buyer's credentials for future fraud. Berger explained.
“They use tools to automate this… They have skimmers installed on their sites,” he added.
This level of complexity allows scammers to not only steal directly from consumers, but also maintain a facade of legitimacy, often receiving high ratings from satisfied customers who are unaware of the scam. can.
In just one month of 2022, the payments industry will Estimation Triangulation fraud has resulted in financial losses for merchants ranging from $660 million to more than $1 billion.
Businesses and consumers are vulnerable
The calculated strategies that scammers employ to deceive both businesses and consumers are under fire across today's digital landscape, where more and more purchases are made online.
This has created a juxtaposition in which many of the tools that are so helpful for small businesses to get off the ground, such as website creation and social presence, are being used by fraudsters to penetrate their defenses.
“When you make payments online, there are vulnerabilities,” Lemberger stressed.
He said Visa recognizes that many small and medium-sized businesses are vulnerable in three main categories. Online-only store. Creators and businesses within the content economy.
Main Street businesses tend to be vulnerable through supply-side and omnichannel attack vectors. Meanwhile, online stores are falling victim to first-party fraud, triangulation fraud, and other digitally native schemes. Content creators can be vulnerable to the payment and micropayment mechanisms they rely on for a living, as well as behavioral fraud.
Lemberger said one of the key takeaways is the important role of awareness and education in fraud prevention. The allure of unbeatable deals can cloud judgment and cause consumers and businesses alike to miss potential red flags.
Fighting fraud is a team-based effort
Mr. Lemberger emphasized the importance of cooperation within networks to combat fraud.
“We are only as good as our community,” he said. “Visa is not a silver bullet against all fraud.”
He highlighted continued efforts to stay ahead of fraudsters, including investing in technology to identify and combat emerging fraud patterns and sharing information across the network.
Fighting fraud requires a collective effort. And as businesses and consumers navigate an increasingly digital environment, awareness becomes paramount. From suspiciously low prices to unfamiliar payment processes, being able to recognize the signs of fraud can mean the difference between falling victim and staying safe.
“If you don't feel it's right for you, check with your financial institution and use a brand you know and trust, which will provide a good layer of protection,” Lemberger says. I did.
Visa's commitment to sharing insights and investing in innovative technology reflects a broader imperative within the industry. By fostering a culture of information exchange and leveraging state-of-the-art tools, stakeholders can adapt to emerging threats and strengthen defenses against exploitation, Lemberger said.
After all, the fight against fraud is a dynamic one, and businesses and consumers must remain vigilant, learn about the signs of fraud, and work together to create a safer business environment for everyone.
As National Small Business Week comes to a close, it's more important than ever for small businesses and entrepreneurs to protect both themselves and their customers.
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