Payment fraud is no longer a rare occurrence; it's a growing epidemic. If you think your business is too small to be a target, think again. It happens to businesses of all sizes, from startups to multinational corporations.
In 2023 alone, businesses worldwide lost over $485 billion to payment fraud.
Fraudsters have exploited digital transactions, weak security protocols, and even human error to drain businesses of their hard-earned money.
How Businesses Are Vulnerable
● Lack of Security Measures: Outdated payment systems or weak authentication processes can make your business vulnerable.
● Human Error & Social Engineering: You can fall for phishing scams, fake invoices, or urgent payment requests from what you believe to be a trusted source.
● Weak Internal Controls: Without multi-level approvals or transaction monitoring, fraudulent payments can go unnoticed until it’s too late.
● Trusting the Wrong Vendors or Clients: Fraudsters can impersonate real vendors or create fake businesses to trick your company into making payments.
Most Common Types of Payment Fraud and How to Prevent It
Business Email Compromise (BEC)
How to Prevent It
● Always verify payment requests via phone or a secondary email before processing large transfers.
● Educate employees on recognizing fraudulent emails.
Fake Invoice Fraud
A fraudster can send a fake invoice that looks identical to a real vendor’s invoice. If the finance team doesn’t carefully verify details, they may process the payment, sending money straight to the scammer.
How to Prevent it
● Always confirm bank details with vendors via a phone call before making changes.
● Require vendors to update banking details through a secure portal, not email.
● Implement a two-step approval process for vendor payments.
Phishing Scams
Fake emails or text messages can be sent pretending to be banks, suppliers, or even government agencies. They trick employees into clicking malicious links or entering login details, giving scammers access to company funds.
How to Prevent It
● Train employees to never click unknown links in emails.
● Use multi-factor authentication (MFA) for all financial logins.
● Verify payment changes via phone calls.
Employee Fraud
An employee with financial access can steal money by faking transactions, creating fake vendors, or skimming cash.
How to Prevent It
● Implement role-based access to financial accounts.
● Require multiple approvers for high-value transactions.
● Conduct regular audits to catch unusual activity.
Rogue Automatic Payments
This occurs when an unknowingly authorized recurring payment is made to fraudulent entities, resulting in ongoing unauthorized charges. For example, your business may sign up for a free trial of a software service, not realizing that failing to cancel would result in automatic monthly charges to fraudsters.
How to Prevent It
● Scrutinize Terms and Conditions: Carefully review agreements for any clauses about recurring payments before authorization.
● Monitor Bank Statements Regularly: Regularly review financial statements to identify and dispute unauthorized charges promptly.
● Set Up Alerts: Use banking features that notify you of new recurring charges or significant transactions.
Card Skimming
Fraudsters install hidden devices, known as skimmers, on legitimate card readers at ATMs, gas stations, or point-of-sale terminals. These devices capture card information during legitimate transactions, which is later used to create counterfeit cards or conduct unauthorized online purchases.
How to Prevent It
● Regularly Inspect Card Readers: Train staff to identify and report any unusual attachments or modifications to card readers.
● Use Tamper-Evident Seals: Apply seals to card readers to indicate any unauthorized access.
● Educate Customers: Inform customers about skimming risks and encourage them to report suspicious devices.
How Tela Protects Your Business From Payment Fraud
Stopping Business Email Compromise (BEC) with Secure Payment Verification
● AI-Powered Fraud Alerts – Tela detects unusual payment requests and flags suspicious transactions.
● Two-Factor Approval Process – Large payments require multi-user authorization to prevent unauthorized transfers.
● Secure Vendor Verification – Tela ensures that any changes to vendor bank details are authenticated.
Preventing Fake Invoice Fraud with AI Invoice Matching
● Automated Invoice Scanning – Tela’s AI cross-checks invoices against previous records to detect inconsistencies.
● Verified Vendor Payments – All vendor details are securely stored, and any changes trigger an alert.
● Approval Workflows – Payments can’t be processed without managerial approval, reducing human error.
Blocking Phishing Scams with Secure Login & User Roles
● Multi-Factor Authentication (MFA) – Employees must verify their identity using multiple authentication steps.
● Role-Based Access Control – Employees only see the financial data relevant to their role, reducing insider risks.
● AI Fraud Monitoring – Tela tracks login patterns and alerts users of any unusual access attempts.
Detecting Employee Fraud with AI Expense Monitoring
● Expense Tracking – Every transaction is logged, making unauthorized payments easy to spot.
● Automatic Fraud Flags – Suspicious transactions trigger an alert before they are processed.
● Detailed Audit Trails – Tela stores a transparent transaction history, reducing internal fraud opportunities.
Preventing Card Skimming with Secure Online Payments
● Encrypted Transactions – Tela uses bank-grade encryption to protect payment data.
● Card Tokenization – Instead of storing actual card details, Tela replaces them with a secure digital token.
● Fraud Detection Algorithms – AI scans for unusual spending patterns and blocks suspicious transactions.
Protecting Against Rogue Automatic Payments with Subscription Management
● Auto-Detecting Unusual Recurring Payments – Tela flags unknown subscription charges for review.
● Dashboard for Managing Auto-Payments – Businesses can easily track and cancel recurring payments within Tela.
● Instant Payment Reversal for Unauthorized Charges – Tela helps businesses quickly reverse unauthorized charges.
Conclusion
Payment fraud is evolving daily, and no business is completely safe. The good news? With the right security measures, policies, and technology, you can drastically reduce your risk.
Fraudsters are getting smarter, but Tela makes it nearly impossible for them to steal from you. With AI-powered fraud detection and multi-layered payment security, Tela protects your business, your customers, and your finances.