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14th June 2023

Fraud Prevention and Protection Guide

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In the digital age, transactions are more convenient than ever. But the ability to easily shop online, set up new supplier transactions over the internet, or contact friends and families can come with an unwanted companion - fraud.

Whether you are a simply needing to protect yourself or are a small business looking to embrace ecommerce, understanding the fundamentals of fraud and effective prevention strategies is paramount to ensuring your security and success.

In this guide, we'll explore:

  • The nature of fraud and its various types
  • Protective measures against these fraud types
  • The integral role of verification tools in fraud prevention

Understanding Fraud

Simply put, fraud is an intentional deception designed for personal gain or to cause harm to another party. This could be in the form of identity fraud, where someone pretends to be someone they are not, or online fraud, which allows people to gain access to your financial information.

Whether you're a small business or private individual, fraud can cause significant financial loss, operational disruption, and reputational damage.

Recognizing Types of Fraud

To combat fraud, it's crucial to know your enemy. Here are some different types of fraud to watch out for:

  • Ecommerce Fraud: This is when fraudulent transactions in online stores are made with your details, and can cover credit card fraud, chargeback fraud and friendly fraud.
  • Payment Fraud: This type of fraud happens when stolen financial information is used for unauthorized transactions.
  • Identity Fraud: Fraudsters gather and use your personal data to commit fraud3 such as taking out loans or opening bank accounts. This can lead to significant financial losses and potential damage to credit scores.
  • Phishing Fraud: This online fraud uses emails or text messages to trick people into revealing sensitive information like usernames, passwords or credit card details.
  • Business Email Compromise (BEC): This type of fraud targets businesses dealing with foreign suppliers or businesses that use wire transfer payments. The scam involves compromising legitimate business email accounts to conduct unauthorized fund transfers.
  • Wire Transfer Fraud: Fraudsters can impersonate contractors, solicitors or even staff, requesting for fund transfers to their account6. They could also pretend to be a relative asking for funds to help them out.
  • Invoice Fraud: Fraudsters using this technique send an invoice to a company or person for goods or services that were not delivered or rendered, hoping the company won't verify the invoices' accuracy.
  • Social engineering: Fraudsters would try and gain as much information on you as possible to build up a profile, then use it to defraud you or people related to you.
  • Catfishing: People pretend to be someone they are not online – usually by using a fake persona, image, etc - in an attempt to meet someone for personal or romantic reasons. This could lead to harassment, bullying or even personal manipulation.

Fraud Prevention Solutions

Fraudster often use either lack security or advanced software to carry out their scams. There are ways to help reduce the risk of being the victim of fraud. Effective fraud prevention entails a proactive approach and the implementation of reliable strategies:

  • Ecommerce Fraud Prevention: Steps could include using two-factor authentication, secure payment gateways, and fraud detection software. As a business owner, regularly update your ecommerce platform's security features and monitor customer behaviour for any suspicious activities1. As a shopper, only give your details to websites you trust – check online review sites to find scam websites.
  • Payment Fraud Prevention: As with ecommerce fraud, it's important to boost your online security systems. Employ encrypted payment systems, continuously monitor transactions and educate your customers about potential scams. It's also worth training your employees in fraud prevention.
  • Identity Fraud Protection: Again, don't give your details to anyone you don't 100% trust. Use online verification searches to check someone is who they claim to be. As a business, you can protect customer data, promote strong password practices among customers, and use reliable identity verification services.
  • Phishing Fraud Prevention: As these can be almost daily attacks, being aware of the threat through training is the best approach. It's also worth implementing email filters to block potential phishing emails, and encourage the use of two-factor authentication.
  • Business Email Compromise (BEC) Prevention: Again, education is the key here. As a business owner, it's worth implementing a verification process for changes to payment details, and setting up system alerts for email display name deception.
  • Wire Transfer Fraud Prevention: With any new payment requests, always verify the business. Implement a two-person approval process for transferring money, especially for larger amounts.
  • Invoice Fraud Prevention: Look at establishing strong internal controls, ensure segregation of duties, regularly audit supplier lists to verify them, and cross-verify invoices with purchase orders and delivery notes.
  • Social engineering: Avoid sharing your details – whether that's address, age, family details - with any site or person you don't trust. Information like mother's maiden name could be used as password question.
  • Catfishing: Try and verify as best you can anyone you meet online. If you are suspicious, ask them to provide some identifier – even their name and the road they live on – so you can check online if they are telling the truth.

Verification Tools in Fraud Prevention

As technology evolves, so do the tools to counteract fraud. Verification tools have become a fundamental part of online fraud prevention strategies. They validate the information provided by customers, helping to ensure the legitimacy of transactions8.

Colin Frith, Head of Business Development at says: “Online verification is a quick and easy way to verify that the person you're talking to or doing business with is who they claim to be.”

“We offer person verification, address verification and mobile verification searches. These can be used by businesses through our API or for one-off checks if you want to make sure a new person in your life is who they claim to be.”

“These can be used for Know Your Customer (KYC) and Anti-Money Laundering (AML) checks, which are mandatory for all UK businesses. These checks safeguard against any money laundering or fraudulent activity being carried out by customers or employees.”

Try our online verification tools:

Tokenisation and fraud prevention

An advanced form of fraud prevention is a technique called tokenisation. This works by taking sensitive information, such as unique ID numbers, bank account numbers etc, and replacing them with non-sensitive tokens.

So, if someone was to have their details verified by a company, those details would be replaced by a unique token that would be used in future instead of the actual details. This means the sensitive data is not being shared or at risk of attack during transactions. Tokens are totally irreversible, so cannot be reverse engineered by hackers.

Top Tips for Fraud Prevention

As well as our more specific recommendations, here are some general tips on how to avoid being the victim of fraud.

  1. Keep Software Updated: Always maintain updated systems and security software to protect against new vulnerabilities.
  2. Educate Staff and Customers: For businesses, raise awareness about the risks of fraud and the importance of following security protocols.
  3. Monitor Transactions: Regular review of transactions – whether as a business or in your own bank account - can help identify unusual patterns that may signal fraudulent activities.
  4. Use Verification Services: Leverage services that can validate customer information to minimize the risk of fraud.
  5. Only use sites you trust: If in doubt, check and check again.
  6. Don't click on anything you're suspicious of: If you've got a request to click a link – either on email or text – only click it if you're 100% certain. If not, try to navigate to the site directly and call their help number.
  7. If it's too good to be true, it probably is: If an offer sounds too good, it's probably a scam. Take your time, do research, go online to verify the company and come back when you're in a better position.
  8. Report a scam: If it's too late and you're the victim of a scam, or you've spotted a scam, report it right away.


In the ever-evolving digital landscape, fraud prevention is not an option but a necessity. Understanding fraud, its types and implementing protective measures using verification tools are key to safeguarding your business from potential devastation.

By staying informed, vigilant, and proactive, you can secure your business and ensure its sustained growth in the online marketplace.


  1. CNBC
  2. Financial Fraud Action UK
  3. Identity Theft Resource Center
  4. Cybersecurity & Infrastructure Security Agency
  5. FBI
  6. Financial Fraud Action UK
  7. Association of Certified Fraud Examiners
  8. TechRepublic


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