Small Businesses Increasingly Victims of Credit Fraud, Survey Finds


Javelin Strategy & Research’s report “2012 Identity Fraud for Small Business Owners: PayPal and Alternative Payments Poised to Change SMBO Payment Landscape,” found that many small business owners have been victims of fraud, particularly via credit cards. This is because many companies fail to take proper precautions, and in particular, mingle business and personal accounts.

Javelin reported that small-business owners have a higher fraud rate than non-business owners, at 8.8% versus 4.7%, and that only 38% of business owners take the time to personally examine business transactions each month. In addition, more than half of small businesses use personal accounts for business-related expenses, and 38% use only personal accounts, without any separate business accounts.

Other factors that lead to this type of fraud occurring stem from a lack of security in general, the survey found. Only 5% of business owners conduct background checks on workers before hiring them, and only 18% of business owners said they have business-specific antivirus software. Three percent said they take the time to educate workers on safe internet habits, and 43% said they do not take any of these precautions at all.

In order to protect their credit information, more business owners are turning to alternative payment menthods, such as PayPal.  The survey found 17% used such a service in the past seven days, 21% used one  in the past 30 days, and 13% used one in the past 90 days. Business owners were using alternative methods for payment more frequently than non-business owners.

Overall, 33% of business owners said they felt PayPal was a safe payment method to use. This was second only to Visa, which came in first with 35% of respondents saying it was safe.