Partner Article

Catching the Catfish: How to Avoid MOTO Fraud

Have you ever heard of a catfish? No, I’m not talking about the large, rather ugly bottom-feeders that inhabit our rivers and coastal waters. It’s an internet buzzword describing a person who uses a false identity online. These fraudsters are often to be found skulking around online dating sites, preying on the emotionally vulnerable to extort money from them. The problem for SMEs is that catfish aren’t only stalking cyberspace. You need to be on constant alert to ensure that your next mail or telephone order (MOTO) hasn’t been placed by an identity fraudster.

Get it wrong and it could be a costly mistake for your business.

Most of the headlines these days seem to focus on e-commerce or banking fraud. Yet MOTO cannot be ignored, especially when it comes to those smaller firms which may not have payment functionality yet integrated with their website. In August 2014, MOTO accounted for 15% of all payments processed by Worldpay in the retail sector.

New figures from Financial Fraud Action UK released in September reveal that losses due to remote card purchases (made online, over the telephone or by mail order) rose 23% from the first half of 2013 to reach £174.5 million in the first six months of 2014. Although e-commerce accounted for the majority of this sum, MOTO fraud remains a concern, especially as online retailers continue to improve their security.

Tightening the Net

There are a few simple steps to lowering the risk of fraud affecting your business. Just like staying safe when online dating, it all revolves around keeping alert and trusting your instincts. If something looks suspect, demand assurances via the cardholder’s ID, and if it’s still not quite right then cancel the transaction.

If the buyer wants to collect the goods, they must present the card they paid with when they come into your store and they must come in person. Don’t be fobbed off with a third party and an excuse that they don’t have the buyer’s card. If they do agree to come in then it’s also important to cancel or refund any mail or telephone order payment made previously. A new payment should be processed, during which you need to follow instructions in your card machine guide and on the device screen itself.

Alternatively, if you’re delivering goods to their premises, ensure that those goods are given only to the person who has ordered them. It’s really important the person delivering these goods checks the cardholder’s ID, matches it with the cardholder name and then gets a signature from the cardholder as proof of delivery. This signature can be used if a subsequent dispute arises and will help your business reclaim any money lost through fraud.

A Cautionary Tale

One business which failed to follow the above steps was a jewellery store. It processed a telephone order for a Rolex watch worth £6,000 and delivered it to the customer’s home. Although the order seemed legitimate, the customer maintained they couldn’t come into the store to pick it up.

That in itself should have raised the alarm with the jeweller – after all, most people would want to collect such an expensive item in person. However, when it was delivered the store didn’t get the signature from the cardholder but someone pretending to be that person after they realised it was a Rolex watch. Because the business didn’t have that all-important signature they weren’t covered and ended up £6,000 down.

These kinds of mistakes can seriously affect your bottom line, especially if you’re a small businesses. Fraudsters will always go after the lower hanging fruit. It doesn’t matter whether that’s a middle-aged divorcee looking for love, or a small business owner who still accepts mail and telephone orders but is too trusting that all his customers are who they say they are.

So sharpen your senses today and make sure those catfish fraudsters don’t break your business.

This was posted in Bdaily's Members' News section by Worldpay UK .