4 Best Ways to Protect Against Business Credit Card Fraud—and How to Recover If You’re a Victim

Margaret Spencer

Contributing Writer at Fundera
Margaret Spencer writes about small business finance and entrepreneurship. She is interested in financial empowerment for small business owners across industries, and passionate about sharing insights on accessibility and communication to help entrepreneurs grow.

If you’ve had a personal credit card stolen or been the victim of fraud, you know how stressful and potentially devastating the financial damages can be. But as harmful as personal credit card theft is, a stolen business credit card poses an even greater threat—it impacts the financial wellbeing of the business and all employees, not just an individual. And business credit card fraud doesn’t just hurt your finances—instances of business fraud can negatively impact your reputation, and compromise your relationships with customers, vendors, and other businesses.

As a reminder, business fraud is a broad category that includes business identity theft and business credit card fraud, which can be difficult for small business owners to catch without the benefit of an accounting department. A successful scammer can cause tens of thousands of dollars in damage before being detected, which many small businesses aren’t able to bounce back from.

That said, there are a few simple steps you can take to protect yourself from business credit card fraud occurring in the first place. But in the event of a stolen credit card, the most important thing to do is to be proactive about identifying the fraudulent charges or accounts, and alerting the appropriate bank and authorities.

4 Steps Against Fraud You Can Take Today

Credit card information is vulnerable to threats both on- and offline. In the current data security landscape, you might not have total control over your financial data online—including your business credit card information—but you are capable of preventing long-term damage.

With these four tips, you can actively protect your business cards and information, and stay vigilant about account activity.

1. Keep Your Card Secure

The most basic way to prevent your credit card information from theft is protecting the physical card itself. Take care to only use your business credit cards outside your home or office when necessary, which can prevent compromising your information due to human error.

But the nature of your business might require you to have a business credit card with you all the time. In that case, it might be worthwhile to invest in a wallet or pocketbook designed specifically to protect against illegal strip-readers and card theft.

Use an EMV Chip Card

There’s a good chance you’re aware of criminals using a device to capture credit card information when you swipe your card at a cash register, or other card reader. Data is stolen from the magnetic strip on a card during a seemingly legitimate transaction, like giving a waiter your card, or using an ATM.  (This is often referred to as “skimming.”)

Debit and credit cards enabled with EMV microchips, usually in addition to the regular magnetic strip, are inserted into the terminal, instead of the  traditional swipe-and-sign cards. The chip uses a one-time transaction code, which can’t be used to fraudulently duplicate your card. Unfortunately, EMV cards can’t prevent online credit card theft, but they do significantly lower your risk of unknowingly swiping your banking information into the wrong hands.

2. Change Your Passwords Regularly (And Make Them Unusual)

This tip may seem obvious, but it’s one of the surest ways to protect your business’s information online: Actively try to make it difficult for someone to hack into your account.

If you’ve used the same pet’s name for a decade, it might be time to challenge yourself to come up with a difficult-to-guess password for each account you use for your business finances. (It’s a great memory exercise!) Remember, it’s easier to reset a forgotten password than it is to recover thousands of dollars in fraudulent charges.  

Most online logins require a passcode with some sort of special character, number, or capitalization, but don’t just use “password1!” to secure your accounts online. It’s best practice to use a different password for each account.

And you don’t need to remember those tricky passwords on your own. Use a secure application like 1Password to manage and store login credentials, which can help streamline accounts, and make it easier for your team to gain access they need without compromising security. If regularly changing your passwords isn’t already part of your administrative routine, make an effort to refresh old passwords every six months.

If you do end up getting hacked, methodically go through all business accounts—even those that weren’t compromised—and do a full sweep of your passwords. Make a schedule to change passwords for banking accounts and other proprietary information every six months.

3. Check Your Statements

Unfortunately, the first sign that your credit card information has been stolen is often the fraudulent charge itself. Ideally, of course, you’ll detect business credit card fraud before any transactions occur, but the next best thing is to catch fraud ASAP.

Set a Weekly Reminder

Regularly checking your business credit card statements is a great way to stay vigilant about suspicious activity (and track business spending in general). If you’re not already using your bank’s online portal or another banking software, start now! These tools make monitoring your credit card purchases extremely user-friendly.

Try to make time every week to look over credit card spending from the previous week—that way, it’s more manageable to review each charge carefully, rather than letting them pile up over time. And if you notice any strange account activity, contact your card issuer ASAP.

Hire Outside Help

An accountant or other financial professional can help make sure your records and accounts are in order, and alert you to any discrepancies that might indicate fraud. And if you’re especially concerned about fraud, enlist the help of a specialized forensic accountant. They’re trained to review financial records for exactly this purpose, and can help you detect and prove fraud when it happens.

4. Limit Your Company Credit Cards

If you’re the sole proprietor of your business, or the only person with access to the business credit card, there’s less likelihood of employee fraud and misuse of company funds. Fewer cards linked to your account also reduces the chances of compromising your financial information due to a lost or stolen card.

Of course, it’s not always feasible to have one card for your business. If you do need to delegate spending to your employees, ensure that you’re only giving out cards to your most trusted staff members, and make sure they return their cards as soon as they’ve completed their purchases.  

For Greater Protection, Use a Prepaid Business Credit Card

Many business credit cards allow business owners control over employee spending, like setting credit limits on employee cards and generating automatic expense reports. But for even greater peace of mind, you can distribute prepaid business debit cards to your employees, instead.

In particular, the Bento for Business card has some of the most comprehensive employee controls we’ve seen in a business debit card: you can set spend limits, track card activity via mobile app or dashboard, automatically integrate expense data into your bookkeeping software, and more. And because the Bento isn’t technically a credit card, any negative card activity won’t hurt your credit score.

What to Do if You’re a Victim of Fraud

The bank calls about an odd charge, your card is unexpectedly declined, or you notice something missing from your pockets—most of us are familiar with the sinking feeling of losing a credit card. If you think your business credit card is lost or your information has been stolen, here’s what you can do to assess the problem, control the damage, and regain some peace of mind.

1. Place a temporary freeze on your card.

Many banks allow you to place a temporary hold on your card while you examine fraudulent activity or look for a misplaced card. This function might even be accessible from your online banking account, so you don’t have to alert your bank until you’re sure there’s been a security breach.

When you can’t find your business credit card, or know for a fact that it’s been stolen, log in to your online banking portal and look for any new or unusual charges. Call the credit card company directly if you’re not able to view your recent purchases online.

As long as there aren’t fraudulent charges visible on your account statement, it’s okay to take some time to look for a misplaced card before going forward with a cancellation. But after a few hours, the safest choice is to alert your credit card company and freeze the account.

And if there haven’t been suspicious charges to your account, double check that your card isn’t simply “hiding” in your pockets, car, or desk drawer (it happens to the best of us).

2. Contact your credit card company.

When you suspect your card has been stolen, or account has been hacked, you should talk to your banking representative immediately. They will most likely ask you to verify some recent purchases, and it can be helpful to view your statement online so you’re prepared.

Another reason to contact your bank and potentially cancel your credit cards is if a data breach targeting customer information occurs at a retailer where you’ve used or stored financial information.

3. Seek legal action.

Once you’re positive that your card has been stolen, submit a complaint to the Federal Trade Commission  (FTC) and a file a report with local police. If you are a victim of fraud, you can request that a credit reporting bureau set up a fraud alert, which actively alerts authorities to potential fraudulent activity on your account.

Stay Vigilant, Act Fast

Every business with a credit card is susceptible to business credit card fraud, and small businesses are no different. Business owners put themselves at risk for fraud by being complacent, so even if you have tricky passwords and store your card securely, it’s smart to continually work on ways to improve security and protect your information.

The more aware you are of credit card security, the less likely you are to be caught off guard by a stolen card. Take proactive measures, like securing your information and physical card, to protect you from hacking and theft. And regular review of your credit card statements ensures that you’ll respond quickly if a breach does occur.

If you do suspect any fraudulent activity, don’t hesitate to contact your credit card issuer to freeze or cancel your card. In fact, throughout the process, it’s imperative to stay in close contact with any authority involved in you case—whether it’s the IRS, a credit card company, or police—because it’s the best way to seek recourse if you’re defrauded.

No single defense will prevent business credit card fraud altogether, but actively protecting your card and staying alert will deter potential threats, and help you minimize damage of business credit card fraud.

Editorial Note: Any opinions, analyses, reviews or recommendations expressed in this article are those of the author’s alone, and have not been reviewed, approved, or otherwise endorsed by any of these entities.

Margaret Spencer

Contributing Writer at Fundera
Margaret Spencer writes about small business finance and entrepreneurship. She is interested in financial empowerment for small business owners across industries, and passionate about sharing insights on accessibility and communication to help entrepreneurs grow.

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