Business Credit Card Fraud: How to Protect Your Brand and How to Get Back on Track

Business Credit Card Fraud

Business credit card fraud is more common than you think, and it can cause lasting damage.

Corporate credit cards are intended to be used by businesses of all sizes. They allow companies to build a credit profile to help them earn better terms when borrowing in the future — similar to personal cards.

Personal cards come with consumer protection services, while business variants tend to focus more on offering special perks to the brands that use them. But just like personal credit cards, businesses are also susceptible to credit card fraud.

In this blog post, you will learn about business credit card fraud and how you can protect your company from its consequences.

Security Challenges of Standard Company Credit Cards

Traditional corporate credit cards have long been favored by businesses because they are easy to obtain and everyone knows how to use them. But they are no longer the most secure choice. In fact, shared corporate cards open the doors to cyber threats and fraud.

Because credit cards are so easy to use, they are also easy to abuse. Finance managers have little visibility into how much is being spent and on what until the end of the month. This means that employees can overspend or make unauthorized purchases for weeks before anyone finds out. Even then, the finance department must comb through each line of a credit card statement in order to uncover any wrongdoing. This leaves the company open to credit card fraud and overspending.

Furthermore, the physical nature of credit cards as payment means that they can be easily lost, stolen, or misplaced. And while spending can be suspended with a quick phone call (once the card is noticed missing), it can cause delays in payments and leave employees temporarily unable to make purchases. If the card has to be replaced and the number and expiration date changes, all pre-approved charges and subscription payments must be updated, which can be time-consuming and frustrating.

How Does Credit Card Fraud Affect Businesses?

While a fraud against an individual would have implications against them alone, a business has multiple stakeholders involved. The consequences of fraud can harm a lot of people in the process. Here are some of the ways in which card frauds affect businesses. 

Company Funds Stolen 

One of the biggest consequences of credit card fraud is the depletion of company money. Unauthorized transactions can financially cripple the business in question. As a result of the stolen funds, it can become difficult to make inventory transactions. 

Also, other vital operation costs such as employee salaries, marketing expenses, rent, and vendor payments are shelved. With a lack of funds to operate on, the growth of the business is hampered massively. 

Company Reputation Damaged 

If the company is operating on limited funds, the quality of services often declines. There can also be delays in making routine payments, as well. This reduces the credibility of the brand and negatively affects its reputation. 

Clients and vendors are unwilling to rely on your brand due to the poor standard of operations, and your business relationships are compromised.

Company Professionals Suffer 

If there is a massive financial loss as a result of the fraud, you will be unable to pay your employees. Moreover, financial stakeholders need to deal with losses in the investment they made in your brand. The negative ROI will make it very difficult to revive your brand reputation.

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Getting Back on Track After Corporate Credit Card Fraud

If your company has been the victim of credit card fraud, the recovery process can be daunting. Here are a few steps to take in the aftermath.

Recover the Stolen Funds

In many cases, businesses will offer the perpetrator a chance to repay the misused funds before pressing charges. If the perpetrator is uncooperative, you can go to the authorities to press charges and to your insurer to recoup the losses. Keep in mind that pursuing legal action could end up costing your company even more time and cash.

Safeguard Against Repeat Offenses 

Clearly, whatever preventative measures were in place to block fraud were not effective enough. Conduct an audit (either internally or by a third party) to see where security can be implemented or strengthened.

Create and Train All Staff on New Expense Policy

Creating and training staff on a new expense policy ensures that all employees are aware of what constitutes appropriate corporate credit card use and what is considered fraud. They should also be made aware of the consequences of violating the policy. 

These are the first steps to ensuring that credit card fraud doesn’t negatively impact your business again.

How to Avoid Credit Card Fraud in Business

Even if your company hasn’t been the victim of prior offenses, you can take a number of steps to protect yourself against such frauds in the future. Here are some of the measures that you can start taking today.

Regularly Review Statements 

To keep track of all financial statements to ensure that everything is accounted for. There should be no suspicious or unfamiliar transactions on the financial records. This way, you are aware of where the money is going and that the funds are accounted for. 

Keep Details Secure 

Ensure that the physical credit card is stored in a secure location. You should never disclose the details to a source that isn’t trusted. The strip reader should also be protected so that fraudsters cannot use skimmers to retrieve the card data. 

Limit Access to Business Credit Card 

Not everybody needs to have access to a business credit card. If staff members need to have access to it, you can place limits on their allowance. Remember that the fewer people have access to the card, the less vulnerable the company is to fraud. If necessary, restrict access to people in higher posts that are trusted. 

Be Careful While Accepting Orders 

Always be watchful of the details of the orders that are placed. In the case of an e-commerce company, it is important that you verify the details of the purchase. This ensures that fraudsters do not get away with using stolen credit card information. In particular, you should look out for the billing and shipping address of the order. 

Update Passwords Regularly 

Ensuring that you use a complex password that not everybody has access to is the best way to protect your business credit card. Updating the password regularly minimizes the likelihood of hackers breaking into your account. 

Mesh Payments Expense Management

Mesh Payments provides a secure alternative to traditional corporate credit cards. With innovative virtual cards and the new Plug & Pay physical card, you can take total control of your company’s spending.

Finance teams can manage cards by controlling the amount, the vendor, the currency, and the expiry date — ensuring that no unapproved purchases are made. Plus, all transactions can be tracked instantaneously, receipts can be uploaded on-the-go for simple reconciliation, and you can receive real-time notifications for any unusual transactions.

At the first sign of suspicious activity, you can suspend the affected card — without interfering with the cards that manage your SaaS subscriptions, utility bills, or other vendors.

Mesh not only makes sure that all of your corporate payments are secure, but it provides insights to help your business spend smarter. The platform can surface data like unused or duplicate SaaS subscriptions, as well as cheaper alternatives, so you can be sure your money is being well spent.

Fraud Protection with Business Expense Software

In addition to spend management insights, business expense software provides additional layers of fraud protection.

Virtual cards eliminate the possibility of damaging, misplacing, or having physical plastic cards stolen. Virtually controlled cards, like Mesh’s Plug & Pay™ cards, provide the in-person convenience of a physical card but remove identifying features on the card like account and CVV numbers. In the event that a Plug & Pay™ card is stolen or missing, the owner can suspend its use with a simple click. Plus, business doesn’t have to be disrupted because you can immediately create or load a different virtual account to the physical card.

Automated approval workflows within your business expense software provide further defense against fraud. When employees request to create a new virtual card, the appropriate manager will be notified and can approve or deny the request and implement any necessary controls. This prevents rogue cards from floating around and ensures that all purchases using company funds have been approved.

Automated notifications can also let finance managers know of any suspicious activity as soon as it happens. If a vendor charges you noticeably more than previous payment periods, duplicate charges from the same vendor appear, or a purchase is made from a previously unknown vendor, you’ll know right away and can take action with just a few clicks.

Prevent Fraud by Minimizing Exposure 

Corporate credit card fraud can strike anyone, at any time. So, it’s crucial to have infrastructure in place to minimize exposure and reduce risk.

On top of standard safeguards like regular audits, limiting access to company funds, and updating passwords regularly, companies should take advantage of business expense software to further defend against fraud.

Spend controls, moving to virtual payments, approval workflows, and automated notifications can greatly reduce your business’s risk of becoming the victim of corporate fraud.

As we now know, credit card fraud can have terrible effects on the business, the brand’s reputation, and the company’s employees. So, in order to defend all parties, it’s crucial to have protection in place. Start by implementing the easy steps mentioned in this article.

Mesh Payments can help your business optimize spending and make payments more secure. Schedule a demo to learn more.

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