While companies are getting used to transacting and conducting business online, there has been a commensurate increase in e-commerce scams targeting vulnerable businesses, warns the risk management department at First National Bank (FNB).
These types of fraudulent scams typically involve a business-to-business (B2B) operator, manufacturer, or provider claiming to provide lucrative goods and services at competitive prices or at massive discounts. Scammers use this strategy to entice companies to pay upfront, but with no intention of complying.
“Just as digitization drives efficiencies and streamlines processes, digitization also presents huge opportunities for cybercriminals to exploit retailers, businesses and online shoppers who are inattentive to these threats,” says Roshan Jelal, Chief Business Risk Officer. by FNB.
One of the preventative measures companies can take to protect themselves from e-commerce cybercriminals is to conduct a background check on the ‘supplier’ or ‘manufacturer’ before making an advance payment for goods or services. According to FNB, payment should only be made once there is certainty that the company is dealing with a trusted provider.
Jelal urges companies to consider conducting the following pre-checks when dealing with new suppliers / businesses online:
- Always take the time to conduct a thorough verification and investigation independent of the vendor or the other party.
- Popular products and services that are sold at attractive / significantly cheaper prices should be seen as red flags.
- Get references / reviews from organizations that have previously done business with these vendors.
- Check complaint forums like Hellopeter or social media platforms like Facebook and Twitter for negative vendor-related posts. Also, test if the company has a LinkedIn profile that can include information on associate staff members.
- It may be wise to use search engines like Google Maps or Street View to test the legitimacy of a provider’s physical address.
- Check the provider’s phone numbers and email addresses. It can also be useful to check if the provider’s URL matches the email address.
- It is recommended, especially for one-time payments, that businesses use the ‘Verify Owner’ feature in their online banking platform to ensure that the provider’s name matches the account number provided. Customers who suspect fraud should contact the bank immediately.
Additionally, companies are advised to refrain from exposing their bank card details, sensitive personal information, and emails to potential e-commerce cybercriminals, as this may expose them to future risks.
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“Banks have developed and implemented transaction monitoring measures and behavior patterns in an effort to proactively identify spurious transactions and will continue to innovate in terms of changing modus operandi,” says Jelal.
“However, these measures and models will be more effective if companies remain vigilant, protect [their information]and continually educate yourself given the ever-evolving fraud landscape. ”
Palesa Mofokeng is a Moneyweb intern.