How to Avoid Credit Card Fraud
For someone managing a small business, there may seem to be dangers lurking everywhere. Getting your business up and running is stressful enough, but you must also be on guard against financial schemes and scams. One increasingly common hazard is credit card fraud. Of course, we all know to be on the watch for this with our personal cards, but it’s also crucial for your business interests.
Follow these tips to protect your business cards from typical credit card scams:
1. Choose a Reputable Card Issuer
Some essential protections may not be automatically available with every card issuer, so make sure you ask about your rights as a cardholder. Choose a business card with rewards like cash back or other perks. You can probably qualify for some outstanding business credit card offers, depending on your needs.
2. Educate Your Employees
If you issue credit cards to your workers, have a solid agreement that tells them what are and are not valid uses. Ensure that any purchase your employees make is a legitimate business expense, always backed up by receipts. Preferably, issue cards only to those workers who have an ongoing need to spend money on behalf of the company.
3. Be Vigilant About Passwords
Ensure that you and anyone else using a company credit card has a unique password that is not easy to figure out (never use the company name or any part of the cardholder’s name). Require everyone to change the password on a regular cadence.
4. Check Charges Consistently
Don’t wait for the monthly statement to find out that you have been a victim of fraud—make sure someone is regularly reviewing the activity on your business account, looking for anything suspicious. If they find something, let your financial institution know right away.
5. Always Use The Chip
Most credit cards now have EMV microchips that the card terminal can read when the user inserts the card into a slot rather than swiping the magnetic strip along the side. EMV chips generate a one-time-use transaction code, avoiding the dangers of skimming that can occur when criminals access the information on the magnetic stripe.
Another good way to control your use of business credit cards is by issuing prepaid business cards for the employees who need to spend money on your company’s behalf. Prepaid cards have distinct advantages that can make managing your company’s finances easier. For example, each card has a preset spending limit, unlike some business cards that offer unlimited or generous spending caps.
It’s up to you to set the parameters for monthly limits, and you can also restrict spending categories. For example, suppose you want one person to be able to buy office supplies. In that case, you can limit the merchant category for that card. Alternatively, you can prohibit any prepaid card from being used at merchants that aren’t appropriate for your business needs.
Caution Is The Best Approach
As with your personal use of credit, the best way to approach using credit cards for your business is by being judicious. Start slow and be confident that the people you trust with your company’s funds are reliable and forthright. Ensure that you get prompt information about any potential problems and then use your financial institution’s tools.
If you suspect that activity on the account is fraudulent, notify the card issuer immediately. That’s always the best bet for resolving any unauthorized charges and stopping the problem from continuing to grow. Place a freeze on the card or close the account if necessary. Your bank or card issuer will help you decide the best approach. If you find current charges fraudulent, check recent activity to ensure that you didn’t miss something that happened sooner.
Using credit is convenient. It’s a handy payment form that helps smooth the path when funds are tight. As a small business owner, you want to take advantage of the benefits but proceed with appropriate caution to avoid potential problems.
How To Report a Credit Card Scammer
Let your family and friends know about these 5 tips on avoiding credit card fraud by sharing article on your social media outlets. You can also officially report scammers and any other suspicious activity to the Federal Trade Commission (FTC) using the portal below:
How To Protect Yourself More
If you want to be the first to find out the most notorious financial scams every week, feel free to subscribe to the Scam Detector newsletter here. You’ll receive periodic emails – we promise not to spam.
Meanwhile, educate yourself with some other credit card fraud-related articles right under this paragraph. Last but not least, use the comments section below to expose other credit card frauds.
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