Bento For Business

A Credit Card Fraud Case Study

Learning The Risks Of Credit Card Fraud By Example

Growing companies face a unique problem: Due to their limited pool of human resources, the owner of these businesses must entrust the fulfillment of critical payments to a relatively un-vetted staff. At the same time, however, their small size means they don’t have the people, time, or money to follow the best practices of business credit card fraud prevention— or even preventing other types of internal embezzlement.

Is your firm under the threat of credit card fraud?

When considering ways to combat invalid card use, it’s helpful to examine precedents in order to understand their causes. Although thieves’ motives may vary, many simply use business assets to fund personal purchases. Such was the case in 2015 when officials detained a Georgia Military College employee named Sally Price.

Price used a company credit card to run up a bill totaling $3,126.70 in a series of unauthorized transactions. Her purchases included a rental of a condominium for more than $1,000— and another $1,000 in cell phone bills and multiple utility payments for her private residence.

Like some other embezzlers, the 43-year-old employee claimed that she had planned to repay the money. Unfortunately, this justification in the face of her employer’s investigation may have been too little, too late. Price committed card fraud using corporate payment methods that didn’t automatically institute spending limits or stop her from making certain types of transactions. In the end, she was able to get away with the thefts for months before anyone noticed.

The dangers of credit card fraud for small businesses

As the Georgia Military College case illustrates, employee payment fraud is far from a theoretical risk. What you may not realize, however, is that when it occurs, the smallest enterprises usually lose the most: Looking at occupational fraud data, you can see that median losses related to fraudulent schemes usually total around $145,000. The Association of Certified Fraud Examiners, or ACFE, says that many thefts continue for years before business leaders notice them.

The ACFE assessment also determined that small firms bore the burdens of fraud at higher rates due to the typical magnitude of the losses incurred per incident. Furthermore, these organizations may lack the funding to implement control mechanisms that could deter, hinder or catch bad actors. When combined with their tendency to overlook anti-fraud practices, this lack of defensive resources renders small companies vulnerable even to well-known threats, like credit card fraud.

Functional prevention strategies

ACFE experts say employers can fight card fraud by looking for signs that might indicate employees are likely to commit such acts. For instance, workers who experience personal financial troubles account for one-third of cases, and in 22 percent of incidents, fraudsters maintain irregularly close relationships with vendors and customers. More than one-fifth of employees who commit fraud reject the idea that they should share their workloads with others because they don’t want their actions to be monitored.

Bento for Business spending solutions

Business owners need to take control to prevent credit card fraud, especially considering that many cards specifically facilitate ease of use. The Bento for Business Visa debit cards ensure that entrepreneurs don’t have to institute laborious threat assessment practices to implement effective oversight. Its card limits, intelligent spending allowances and non-credit funding automatically serve as powerful barriers against credit card fraud. From the proprietary app, business owners can shut off an employee card from anywhere at the touch of a button, 24/7. All communication with the application and your linked accounts are SSL-encrypted. For maximum confidence, funds held within Bento are FDIC insured to at least $250,000 through The Bancorp Bank; Member FDIC.


Related content