Week of August 4, 2026 | Issue #6
This Week's Headlines
Fraud targeting small businesses has reached an all-time high. According to the FBI, payment fraud losses exceeded $14 billion last year, with small businesses being the primary targets. The good news? Most fraud is preventable with the right knowledge and tools. This week, we're breaking down the most common scams targeting merchants and showing you exactly how to protect yourself.
What's Happening in Fraud Right Now
Chargebacks Surge in Summer: Warm months bring increased transaction volume, and unfortunately, increased fraud attempts. Chargebacks are up 18% compared to last year.
Synthetic Identity Fraud Growing: Criminals are creating fake identities using combinations of real and fabricated information. These accounts look legitimate until the fraud happens.
Card-Not-Present Fraud Dominates: With online and phone orders becoming standard, criminals are exploiting the lack of physical card verification. CNP fraud now accounts for 67% of all fraud losses.
The Most Common Scams Targeting Your Business
Friendly Fraud (Chargeback Fraud): A customer makes a legitimate purchase, receives the product or service, then claims they never received it or that it was unauthorized. The bank sides with the customer, and you lose both the payment and the product.
Stolen Card Numbers: Criminals use stolen credit card information to make purchases. The cardholder eventually notices and disputes the charge. You're left holding the bag.
Account Takeover: Hackers access customer accounts and make unauthorized purchases using saved payment methods.
Phishing Scams: You receive an email that looks like it's from your payment processor or bank, asking you to verify your account information. You provide it, and criminals gain access to your account.
Refund Fraud: A customer receives a refund but keeps the product, then disputes the charge claiming they never received the refund.
This Issue Covers
- The 5 most common payment scams targeting small businesses
- How to spot fraud before it happens
- The biggest myth about fraud prevention
- Practical steps to protect your business this week
- What to do if you're already a victim
The Merchant Myth: Fraud Prevention Is Too Complicated and Expensive
The Myth: Implementing fraud prevention requires expensive software and technical expertise I don't have.
The Reality: Most effective fraud prevention is simple, free, or low-cost. It's about awareness and best practices, not complicated technology.
Yes, advanced fraud detection tools exist and can be helpful. But the biggest protection comes from basic practices: verifying customer information, checking for unusual patterns, requiring CVV codes, and using address verification. These cost nothing and prevent 80% of fraud.
The businesses that get hit hardest are the ones that skip the basics and assume fraud won't happen to them. It will. The question is whether you'll be ready.
Red Flags That Signal Fraud
Before the Transaction: Customer provides mismatched billing and shipping addresses, Multiple failed payment attempts, Unusually large order from a new customer, Customer is in a rush or pressuring you to process quickly, Customer provides incomplete or suspicious information
During the Transaction: Customer uses a different name than on the card, Shipping address is in a high-risk country, Multiple orders to the same address in a short time period, Customer pays with multiple cards for a single order
After the Transaction: Customer immediately requests a refund, Customer claims they never received the product (when tracking shows delivery), Unusual pattern of returns or chargebacks
Your Action This Week
Step 1: Enable Address Verification (AVS) - If you haven't already, enable AVS on all transactions. It's free and catches most fraud. AVS verifies that the billing address matches the address on file with the card issuer.
Step 2: Always Require CVV - Never process a transaction without the CVV (the 3-4 digit code on the back of the card). This simple step prevents the vast majority of card-not-present fraud.
Step 3: Review Your Recent Transactions - Look at the last 30 days of transactions. Do you notice any patterns? Unusual amounts? Repeat customers with different names? Investigate anything suspicious.
Step 4: Set Up Transaction Alerts - Configure your payment processor to alert you to unusual activity: transactions over a certain amount, multiple failed attempts, or transactions from specific countries. Most processors offer this for free.
Step 5: Train Your Team - If you have employees handling payments, make sure they know the red flags. A simple 15-minute training session can save you thousands.
How Payment Processors Are Fighting Fraud
At Custom Payments, we use advanced fraud detection tools to monitor every transaction. We look for patterns that indicate fraud and flag suspicious activity before it becomes a problem. Our system learns from millions of transactions to identify new fraud tactics as they emerge.
If you're using an older payment processor, you might not have these protections. That's a risk you shouldn't take.
From Robert
I've seen fraud destroy small businesses. A restaurant owner lost $8,000 to friendly fraud in a single month. An auto repair shop had their payment processor account compromised and didn't realize it for three weeks.
The worst part? Most of this fraud was preventable with basic precautions.
Fraud isn't a matter of if—it's a matter of when. The businesses that survive are the ones that are prepared.
If you're concerned about fraud or want to review your current fraud prevention measures, call me at 484-393-1576. I'm happy to audit your setup and make sure you're protected.