Did you know 5% of all revenues are lost annually as a result of fraud?

That’s right, in just 2014, the Association of Certified Fraud Examiners (ACFE) reported that the median loss caused by fraud in the study was  $145,000, and 22% of the study cases involved losses of at least $1 million.

The primary victims? Privately owned companies with less than 100 employees. Look out, Fargo.

But never fear! There are steps you can take to guard your company against fraudsters. AJ McAleer from Heat Transfer Warehouse shared some pro tips on avoiding fraud at the last E-Commerce Breakfast on October 29.

AJ McAleer speaks at the October E-Commerce breakfast

AJ McAleer from Heat Transfer Warehouse (left) speaks about fraud prevention.

1. Do your homework. That means researching background on your customer. Looking up addresses. Making phone calls, and asking to speak to the billing individual. And don’t be afraid to trust your gut and hold on to an order. It could save you hundreds of thousands of dollars.

2. Get a secure payment portal. Having a secure way to ensure customer payments not only reduces cases of fraud, but also makes the customer feel more secure when inputting payment information. One of the ways to further secure payments is set up an e-mail that displays failed transactions.

3. Google maps is your friend. If you search an address and see it’s a vacant, decrepit old apartment, you might want to think twice about shipping a product out there. Always compare addresses, check the location, and if there is something suspicious, get clarification from the customer.

4. Talk to somebody. Always get in touch with your customer and clarify details. Sometimes the details could be foggy because a customer is using a freight forwarder: someone who is hired to handle transportation of goods. In this case they will give you the customer details that you need to ensure a safe transaction. If the order seems fishy, ask the customer what they plan to do with the product. Be insistent.

5. Know the red flags. Some fraud flags are multiple failed orders, seeing little changes in the order total, or having different addresses. No mailbox or voicemail is also a bad sign. Sometimes customers want overnight deliveries, so credit cards are not caught. Not on your watch!

6. Always double check. Sometimes, all it takes is another run-through to notice something’s not right. One thing to notice is e-mail addresses. “For example, nike@gmail.com is most likely not Nike,” McAleer said.

7. Hold your ground. If you think the order is a fraud, don’t let anything sway you. McAleer recalls many unpleasant phone calls, where customers have yelled, pleaded, or hung up on him. “They’ll give you a fake life story,” he said. “These people are good.”

At the Heat Transfer Warehouse, McAleer said they encounter fraud 3-5 times a week.

“I was surprised to hear there was that much fraud that goes on,” said E-Commerce Breakfast attendee Alecia Hupperts from AdShark Marketing. She commended events like the breakfast, saying they are “great for brainstorming and getting ideas.”Guests converse at the E-Commerce breakfast.

Holiday season is just around the corner, and that means more business – and more fraud. Using these tips, you could save your startup from being cheated by fraudsters and save that million bucks for more useful things.

And if you’re interested in learning more tips on bettering your company, come to our monthly E-Commerce events. This month, we’re switching it up and instead of breakfast, it’s E-Commerce After Hours. It’s Wednesday, November 19, from 5:30-6:30 PM at the Boiler Room. The guys at Heat Transfer Warehouse will be talking about something everyone in the e-commerce industry needs to know about: search engine optimization (SEO).

Tickets include two drinks and cost ten bucks.

The opportunity to learn new things and network with other startup folks? Priceless.

Sign up here today!

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Marisa Jackels