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What you can do to tackle rising merchant fraud

(Source: Supplied.)

In its latest figures, the Australian Cyber Security Centre says that self-reported losses from cybercrime in Australia totalled $33 billion in the 2020-21 financial year. Fraud and online shopping scams were called out as the most common incidents, putting retail businesses on the front line.

The numbers also show a significant increase in the volume and severity of cyber-attacks, which is an alarming trend. This is particularly true for card-not-present fraud, which accounts for the vast majority of issues, and increased by 12 per cent in the year to 30 June 2021. 

For retailers, detecting and preventing these risks is a financial and reputational imperative. One crucial area is merchant fraud, and any business taking card payments is vulnerable. This is where card data and even entire customer identities can be stolen.

For its part, CommBank’s advanced banking security features ensure merchant accounts remain secure. We’re using the latest artificial intelligence and machine learning techniques to identify irregularities and suspicious activity. 

To support customers, CommBank is set to double the size of its dedicated scam prevention and protection team, alongside the tools, insights, and services the team offers to help retailers understand and mitigate cyber threats.

With scammers becoming more sophisticated every day, here are just some of the steps retailers can take to minimise the impact.

Preventing scams

Your staff can be both the first line of defence and a point of weakness when it comes to fraud and scams. After all, many scams are designed to target an individual, create a sense of urgency, and manipulate people to transfer money or personal information.

Educating staff about emerging and existing scams is the first step to preventing fraud. For payments, it’s worth having clear procedures whether you process through a website, in-store eftpos, or over the phone.

This includes processes to identify suspicious activity and training staff to verify cardholders’ identity, stay up to date with transaction handling processes, and monitor for terminal tampering. 

Maintaining a secure customer database can help identify unusual activity based on buying patterns and addresses. For instance, if someone regularly makes smaller orders to a Sydney address and suddenly orders large volumes to Melbourne, it’s probably worth a closer look.

Managing fraud after the sale

Suspicious refunds and unauthorised payments clearly show that fraud has occurred after purchase. This means being on the lookout for irregular activity and patterns.

For refunds, businesses can manage fraud, such as a refund issued with no corresponding sale, by ensuring refunds are always processed to the card used for the original sale.

A chargeback is when a cardholder disputes an unauthorised transaction, and the payment is reversed. In instances of fraud, it can mean amounts are returned immediately to the customer, and you don’t get paid for goods or services even if they have already been dispatched.

To manage fraud chargebacks, it’s important to remember the preventative measures above and keep up-to-date transaction records to find evidence of payment authorisations more easily. 

Remain on alert

Preventing and managing fraud requires constant vigilance. It’s the responsibility of the business to ensure employees are aware of scams and that they verify the cardholder.

Aside from the controls built into our solutions, CommBank can help you prepare your employees through training and education on best practice approaches to preventing merchant fraud. For more tips, check out our merchant security hub [here].

CommBank is dedicated to supporting Australian retailers. If you think you’ve been a victim of a scam or are worried about the security of your banking – get in touch with your Relationship Manager or visit CommBank Merchant Security.

Things you should know

This article is intended to provide general information of an educational nature only. It does not have regard to the financial situation or needs of any reader and must not be relied upon as financial product advice. You should consider seeking independent financial advice before making any decision based on this information. The information in this article and any opinions, conclusions or recommendations are reasonably held or made, based on the information available at the time of its publication but no representation or warranty, either expressed or implied, is made or provided as to the accuracy, reliability or completeness of any statement made in this article.

Commonwealth Bank of Australia ABN 48 123 123 124. AFSL and Australian Credit Licence 234945.