Small business owners appear to be lucrative targets for identity fraud perpetrators, alarming banking institutions, payment processors, and B2B service providers. According to Javelin’s 2011 Small Business Owners (SMBO) Identity Fraud report, the cost of fraud and identity theft “hit SMBO constituents particularly hard. Javelin research uncovered what was previously an undocumented cost to the industry of $5 billion as a direct result of this fraud. In addition, financial institutions (FIs) lost over $590 million in clients and revenue opportunities over a five‐year period.”
Additionally, the report indicated that small business owners' mean fraud amount is about 5% higher than that for all consumers ($4,851 vs. $4,607). Even more alarming was the fact that the SMBO’s mean victim cost is 150% higher than consumer costs ($1,574 vs. $631).
So what does all of this mean? If you’re a small business lender or service provider, having a robust multi-layered SMBO fraud prevention program in place is essential for client retention and avoiding reputational risk. You CAN take control of the situation with more proactive fraud prevention strategies which will improve your relationships with SMBO customers and save them (and you) money in the long run.