Fraud is Costing Small Businesses £22bn a Year
Over 40% of small businesses have experienced fraud in the last year, according to research conducted by Sage
Fraud costs small and mid-sized businesses an estimated £22bn a year, according to a new report published by Sage Pay.
In the last 12 months, businesses lost an average of £4,515 each as many remain unprotected or oblivious to the fraud prevention they do have in place.
The study confirmed that over 40% of small and mid-sized businesses had experienced fraud in the last year, however 39% still have no fraud protection established.
Furthermore, of those that have purchased some type of protection, 21% don’t know what the prevention tools do and 42% don’t know if they comply with Payment Card Industry Data Security Standards(PCI DSS).
The report listed several ways of reducing the chances of fraud, advising businesses to watch out for high value or large quantity orders, purchases made late at night or in the early hours of the morning and suspicious looking addresses.
Though the results, which were part of Sage Pay’s Payments Landscape Report, highlight a need for tighter fraud prevention tools, Sage’s Simon Black emphasised that companies need to be pragmatic and understand that there is such a thing as a “healthy level” of fraud:
“Experiencing no fraud may mean controls are too tight and legitimate transactions are being rejected. Many businesses simply void the transaction immediately if they suspect fraud, rather than undertaking further checks. In doing so, they’re likely to be turning away genuine customers who have simply entered their details incorrectly.
“Although it can be tempting to tighten security controls in the face of fraud, it is worth keeping in mind that for every extra action a consumer is asked to make, you are prolonging the customer journey and therefore increasing the risk that the customer will drop out of the buying process.”
For more information on understanding fraud and the different types, check out our guide here.