An annual study has found small businesses were fraud victims and had an average of $12,139 stolen in back office fraud in 2015.
Javelin’s “2016 Small Business Fraud Report: Small Businesses are Big Targets for Fraudsters” reports finds
small businesses are slow to adopt anti-fraud tools, indicating either the tools are not available from their bank or the businesses are not aware of the value of these tools. In fact, only 1 in 4 small businesses use alerts.
Back office fraud consists of any unauthorized payment made against a business account, such as misuse of credit and debit cards, payroll systems, or ACH and wire transfers.
Javelin says over 250,000 small businesses are targets of fraud for $3.1 billion.
Motivated by opportunity and greed, fraudsters have found ripe targets in micro and small businesses. Fraudsters are succeeding by deploying some of the same strategies that have worked when targeting consumers, while also developing new approaches designed specifically for compromising businesses’ data and financial accounts.
Yet compared to fraud affecting consumers, the typical fraud amount is twelve times greater when a micro or small business is victimized.
Because of the potential for substantial fraud losses to be incurred by victimized businesses, some FIs and issuers find themselves forced to choose between absorbing the loss and facing their small business banking clients in court.
Regardless of who wins in court, the only real winner is the fraudster. –
The Javelin report concludes noting banks are beginning to provide biometric and behaviometric technologies (a breed of behavior analytics solutions) to their business customers. There is still the hurdle of educating the market before adoption will be seen.
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