Fraudsters posing as customers can use a number of methods to deceive a business – the use of false personal details, using forged currency or someone else’s payment card details to pay for goods, or attempt to build a trusting relationship before placing an order or requesting a line of credit that they have no intention of honouring.
Falling victim to customer fraud could leave a business directly out of pocket. This could be through loss of both the goods/services and their payment – or you can also suffer losses indirectly through having to pay administrative costs associated with the terms and conditions of your banking arrangements.
Here are some examples of what specific instances of customer fraud can look like:
Receiving Payments
The most common customer fraud is abusing methods of payment for goods and services. Make sure your sales are guaranteed and learn how to protect your business if you take any of the following:
- Electronic payments (Cards) – Financial Fraud Action UK provide helpful guidance on how to protect yourself when taking electronic payments.
- Cash – The Bank of England has produced a useful guide on how to spot counterfeit currency.
- Cheques – The Cheque & Credit Clearing Company has issued tips on how to avoid cheque fraud.
Watch out for suspicious orders
Your intuition can often be the best judge of whether a customer interaction seems right, but some of the following tips could help you to pin-point suspicious behaviour:
- Irregular purchasing patterns – including larger than usual orders, multiple purchases of the same item, a series of rapid orders/transactions from a new customer, or a change in behaviour from a regular customer.
- Requests to dodge your processes – whether for payment, invoicing, delivery and so on.
- Lack of interest in the product and asking few questions on its details, particularly if it’s high value.
- Delivery irregularities – for example, if the buyer is unconcerned by delivery costs or wants the goods shipped to an address overseas, or one that is different from the card address. Whilst there could be a perfectly legitimate explanation for the above, they could also be an indicator of fraud. If in doubt, then follow-up by asking for more information.
- Receiving a cheque for more money than the product or service is being sold. The fraudster will usually ask for you to return the difference before the funds have been cleared and ultimately the cheque will bounce.
- Whilst there could be a perfectly legitimate explanation for the above, they could also be an indicator of fraud. If in doubt, follow up by asking for more information.
Is your customer really who they say they are?
- If you are in any doubt about a transaction, make sure to gather as much information as possible to establish your customer is legitimate.
- Ask common sense questions around the nature and purpose of the order or request a form of identification or proof of address to check they match the details you’ve been given.
- If you trade online, then ask your bank about verification tools such as Verified by Visa or MasterCard SecureCode to add an extra layer of customer authentication to your transactions. If they are a trade customer and you are suspicious, then check their credit history, research their reputation and publicly filed records on the internet, or ask for independent references.
- Remember, if you are in any doubt about their validity - then do not proceed.