{"id":4436,"date":"2024-07-15T16:13:48","date_gmt":"2024-07-15T10:43:48","guid":{"rendered":"https:\/\/in.nttdatapay.com\/blog\/?p=4436"},"modified":"2025-07-11T14:02:50","modified_gmt":"2025-07-11T08:32:50","slug":"types-of-merchant-fraud","status":"publish","type":"post","link":"https:\/\/in.nttdatapay.com\/blog\/types-of-merchant-fraud\/","title":{"rendered":"Types of Merchant Fraud: How to handle them"},"content":{"rendered":"<p><span style=\"font-weight: 400;\">Fraudsters constantly devise new techniques to exploit merchants and steal customer payment details. In this blog post, we will explore four major types of merchant fraud and how to handle each.<\/span> \u00a0<\/p>\r\n<h2><span style=\"font-weight: 400;\">Understanding Merchant Fraud in Detail<\/span><\/h2>\r\n<p><span style=\"font-weight: 400;\">Merchant fraud is a serious problem that costs businesses millions each year. As e-commerce and <a href=\"https:\/\/in.nttdatapay.com\/blog\/how-digital-payments-help-your-business-grow\/\">digital payments continue to grow<\/a>, so do opportunities for fraudulent activity. However, there are steps merchants can take to protect themselves from the most common types of merchant fraud.<\/span><\/p>\r\n\n<div class=\"wpcf7 no-js\" id=\"wpcf7-f2460-o1\" lang=\"en-GB\" dir=\"ltr\" data-wpcf7-id=\"2460\">\n<div class=\"screen-reader-response\"><p role=\"status\" aria-live=\"polite\" aria-atomic=\"true\"><\/p> <ul><\/ul><\/div>\n<form action=\"\/blog\/wp-json\/wp\/v2\/posts\/4436#wpcf7-f2460-o1\" method=\"post\" class=\"wpcf7-form init\" aria-label=\"Contact form\" novalidate=\"novalidate\" data-status=\"init\">\n<fieldset class=\"hidden-fields-container\"><input type=\"hidden\" name=\"_wpcf7\" value=\"2460\" \/><input type=\"hidden\" name=\"_wpcf7_version\" value=\"6.1.4\" \/><input type=\"hidden\" name=\"_wpcf7_locale\" value=\"en_GB\" \/><input type=\"hidden\" name=\"_wpcf7_unit_tag\" value=\"wpcf7-f2460-o1\" \/><input type=\"hidden\" name=\"_wpcf7_container_post\" value=\"0\" \/><input type=\"hidden\" name=\"_wpcf7_posted_data_hash\" value=\"\" \/><input type=\"hidden\" name=\"_wpcf7_recaptcha_response\" value=\"\" \/>\n<\/fieldset>\n<div class=\"cus-form\">\n\t<p style=\"font-size: 24px;font-weight: 600;text-align: center;\">Enquire Now\n\t<\/p>\n\t<p><label>Products Required:<\/label><span class=\"wpcf7-form-control-wrap\" data-name=\"products\"><select class=\"wpcf7-form-control wpcf7-select wpcf7-validates-as-required form-control\" aria-required=\"true\" aria-invalid=\"false\" name=\"products\"><option value=\"Payment Gateway\">Payment Gateway<\/option><option value=\"POS Machine\">POS Machine<\/option><option value=\"Reseller\">Reseller<\/option><\/select><\/span><br \/>\n<span class=\"wpcf7-form-control-wrap\" data-name=\"uname\"><input size=\"40\" maxlength=\"400\" class=\"wpcf7-form-control wpcf7-text wpcf7-validates-as-required form-control\" aria-required=\"true\" aria-invalid=\"false\" placeholder=\"Name*\" value=\"\" type=\"text\" name=\"uname\" \/><\/span><br \/>\n<span class=\"wpcf7-form-control-wrap\" data-name=\"phone\"><input size=\"40\" maxlength=\"400\" class=\"wpcf7-form-control wpcf7-tel wpcf7-validates-as-required wpcf7-text wpcf7-validates-as-tel form-control\" aria-required=\"true\" aria-invalid=\"false\" placeholder=\"Phone*\" value=\"\" type=\"tel\" name=\"phone\" \/><\/span><br \/>\n<span class=\"wpcf7-form-control-wrap\" data-name=\"email\"><input size=\"40\" maxlength=\"400\" class=\"wpcf7-form-control wpcf7-email wpcf7-validates-as-required wpcf7-text wpcf7-validates-as-email form-control\" aria-required=\"true\" aria-invalid=\"false\" placeholder=\"Email*\" value=\"\" type=\"email\" name=\"email\" \/><\/span><br \/>\n<span class=\"wpcf7-form-control-wrap\" data-name=\"message\"><textarea cols=\"10\" rows=\"3\" maxlength=\"2000\" class=\"wpcf7-form-control wpcf7-textarea form-control\" aria-invalid=\"false\" placeholder=\"Message\" name=\"message\"><\/textarea><\/span><br \/>\n\t\n\t<input class=\"wpcf7-form-control wpcf7-hidden\" id=\"utm\" value=\"\" type=\"hidden\" name=\"utm\" \/><input class=\"wpcf7-form-control wpcf7-submit has-spinner\" type=\"submit\" value=\"Submit\" \/>\n\t<\/p>\n<\/div>\n<style>\n.cus-form .form-control{width: 100%!important;margin: 7px 0px;padding: 8px;border-radius: 3px;height: auto;line-height: 20px;}\n.cus-form{display: block;margin: 0 auto;max-width: 400px;width: 100%;padding: 20px;box-shadow: 0px 0px 4px 0px #0000002b;border-radius: 6px;margin-bottom: 25px;padding-bottom: 0px;}\n.cus-form .wpcf7-submit{margin: 0 auto;display: block;}\n.cus-form h3{background: #ff6644;text-align: center;margin: -21px;margin-bottom: 20px;padding: 6px;}\n<\/style>\n<p><script>\ndocument.getElementById(\"utm\").value = window.location.href;\n\ndocument.addEventListener( 'wpcf7mailsent', function( event ) {\n location = 'https:\/\/in.nttdatapay.com\/blog\/thankyou\/';\n}, false );\n<\/script>\n<\/p><div class=\"wpcf7-response-output\" aria-hidden=\"true\"><\/div>\n<\/form>\n<\/div>\n\r\n<h3><span style=\"font-weight: 400;\">What is a merchant fraud?<\/span><\/h3>\r\n<p><span style=\"font-weight: 400;\">Merchant fraud occurs when a merchant or vendor commits deception in a business transaction. Some common types of merchant fraud include billing for services or goods not delivered, falsifying customer information for their own financial gain, or processing transactions for counterfeit goods.<\/span><\/p>\r\n<h2 style=\"text-align: center;\"><span id=\"Recent_Web_Stories\">Recent Web Stories<\/span><\/h2>\r\n\t\t<div class=\"web-stories-list alignnone has-archive-link is-view-type-circles is-style-default is-carousel\" data-id=\"1\">\n\t\t\t<div\n\t\t\tclass=\"web-stories-list__inner-wrapper carousel-1\"\n\t\t\tstyle=\"--ws-circle-size:150px\"\n\t\t\t>\n\t\t\t\t\t\t\t\t\t<div\n\t\t\t\t\tclass=\"web-stories-list__carousel circles\"\n\t\t\t\t\tdata-id=\"carousel-1\"\n\t\t\t\t\tdata-prev=\"Previous\"\n\t\t\t\t\tdata-next=\"Next\"\n\t\t\t\t\t>\n\t\t\t\t\t\t\t\t\t<div\n\t\t\t\tclass=\"web-stories-list__story\"\n\t\t\t\tdata-wp-interactive=\"web-stories-block\"\n\t\t\t\tdata-wp-context='{\"instanceId\":1}'\t\t\t\tdata-wp-on--click=\"actions.open\"\n\t\t\t\tdata-wp-on-window--popstate=\"actions.onPopstate\"\n\t\t\t\t>\n\t\t\t\t\t\t\t<div class=\"web-stories-list__story-poster\">\n\t\t\t\t<a href=\"https:\/\/in.nttdatapay.com\/blog\/web-stories\/future-of-digital-currency-how-to-use-cbdc-in-india\/\" >\n\t\t\t\t\t<img\n\t\t\t\t\t\tsrc=\"https:\/\/in.nttdatapay.com\/blog\/wp-content\/uploads\/2024\/03\/Future-of-Digital-Currency-How-to-Use-CBDC-in-India-poster-page-640x853.jpg\"\n\t\t\t\t\t\talt=\"Future of Digital Currency: How to Use CBDC in India\"\n\t\t\t\t\t\twidth=\"185\"\n\t\t\t\t\t\theight=\"308\"\n\t\t\t\t\t\t\t\t\t\t\t\t\tsrcset=\"https:\/\/in.nttdatapay.com\/blog\/wp-content\/uploads\/2024\/03\/Future-of-Digital-Currency-How-to-Use-CBDC-in-India-poster-page.jpg 640w, https:\/\/in.nttdatapay.com\/blog\/wp-content\/uploads\/2024\/03\/Future-of-Digital-Currency-How-to-Use-CBDC-in-India-poster-page-105x140.jpg 105w, https:\/\/in.nttdatapay.com\/blog\/wp-content\/uploads\/2024\/03\/Future-of-Digital-Currency-How-to-Use-CBDC-in-India-poster-page-311x414.jpg 311w, https:\/\/in.nttdatapay.com\/blog\/wp-content\/uploads\/2024\/03\/Future-of-Digital-Currency-How-to-Use-CBDC-in-India-poster-page-149x199.jpg 149w, https:\/\/in.nttdatapay.com\/blog\/wp-content\/uploads\/2024\/03\/Future-of-Digital-Currency-How-to-Use-CBDC-in-India-poster-page-60x80.jpg 60w, https:\/\/in.nttdatapay.com\/blog\/wp-content\/uploads\/2024\/03\/Future-of-Digital-Currency-How-to-Use-CBDC-in-India-poster-page-150x200.jpg 150w\"\n\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\tsizes=\"auto, (max-width: 640px) 100vw, 640px\"\n\t\t\t\t\t\t\t\t\t\t\t\tloading=\"lazy\"\n\t\t\t\t\t\tdecoding=\"async\"\n\t\t\t\t\t>\n\t\t\t\t<\/a>\n\t\t\t<\/div>\n\t\t\t\t\t\t<\/div>\n\t\t\t\t\t\t<div\n\t\t\t\tclass=\"web-stories-list__story\"\n\t\t\t\tdata-wp-interactive=\"web-stories-block\"\n\t\t\t\tdata-wp-context='{\"instanceId\":1}'\t\t\t\tdata-wp-on--click=\"actions.open\"\n\t\t\t\tdata-wp-on-window--popstate=\"actions.onPopstate\"\n\t\t\t\t>\n\t\t\t\t\t\t\t<div class=\"web-stories-list__story-poster\">\n\t\t\t\t<a href=\"https:\/\/in.nttdatapay.com\/blog\/web-stories\/top-reasons-why-online-payment-fails\/\" >\n\t\t\t\t\t<img\n\t\t\t\t\t\tsrc=\"https:\/\/in.nttdatapay.com\/blog\/wp-content\/uploads\/2024\/03\/Top-Reasons-Why-Online-Payment-Fails-poster-page-640x853.jpg\"\n\t\t\t\t\t\talt=\"10 Top Reasons Why Online Payment Fails?\"\n\t\t\t\t\t\twidth=\"185\"\n\t\t\t\t\t\theight=\"308\"\n\t\t\t\t\t\t\t\t\t\t\t\t\tsrcset=\"https:\/\/in.nttdatapay.com\/blog\/wp-content\/uploads\/2024\/03\/Top-Reasons-Why-Online-Payment-Fails-poster-page.jpg 640w, https:\/\/in.nttdatapay.com\/blog\/wp-content\/uploads\/2024\/03\/Top-Reasons-Why-Online-Payment-Fails-poster-page-105x140.jpg 105w, https:\/\/in.nttdatapay.com\/blog\/wp-content\/uploads\/2024\/03\/Top-Reasons-Why-Online-Payment-Fails-poster-page-311x414.jpg 311w, https:\/\/in.nttdatapay.com\/blog\/wp-content\/uploads\/2024\/03\/Top-Reasons-Why-Online-Payment-Fails-poster-page-149x199.jpg 149w, https:\/\/in.nttdatapay.com\/blog\/wp-content\/uploads\/2024\/03\/Top-Reasons-Why-Online-Payment-Fails-poster-page-60x80.jpg 60w, https:\/\/in.nttdatapay.com\/blog\/wp-content\/uploads\/2024\/03\/Top-Reasons-Why-Online-Payment-Fails-poster-page-150x200.jpg 150w\"\n\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\tsizes=\"auto, (max-width: 640px) 100vw, 640px\"\n\t\t\t\t\t\t\t\t\t\t\t\tloading=\"lazy\"\n\t\t\t\t\t\tdecoding=\"async\"\n\t\t\t\t\t>\n\t\t\t\t<\/a>\n\t\t\t<\/div>\n\t\t\t\t\t\t<\/div>\n\t\t\t\t\t\t<div\n\t\t\t\tclass=\"web-stories-list__story\"\n\t\t\t\tdata-wp-interactive=\"web-stories-block\"\n\t\t\t\tdata-wp-context='{\"instanceId\":1}'\t\t\t\tdata-wp-on--click=\"actions.open\"\n\t\t\t\tdata-wp-on-window--popstate=\"actions.onPopstate\"\n\t\t\t\t>\n\t\t\t\t\t\t\t<div class=\"web-stories-list__story-poster\">\n\t\t\t\t<a href=\"https:\/\/in.nttdatapay.com\/blog\/web-stories\/what-are-upi-transaction-mistake\/\" >\n\t\t\t\t\t<img\n\t\t\t\t\t\tsrc=\"https:\/\/in.nttdatapay.com\/blog\/wp-content\/uploads\/2024\/03\/What-Are-UPI-Transaction-Mistake-poster-page-640x853.jpg\"\n\t\t\t\t\t\talt=\"What Are UPI Transaction Mistake?\"\n\t\t\t\t\t\twidth=\"185\"\n\t\t\t\t\t\theight=\"308\"\n\t\t\t\t\t\t\t\t\t\t\t\t\tsrcset=\"https:\/\/in.nttdatapay.com\/blog\/wp-content\/uploads\/2024\/03\/What-Are-UPI-Transaction-Mistake-poster-page.jpg 640w, https:\/\/in.nttdatapay.com\/blog\/wp-content\/uploads\/2024\/03\/What-Are-UPI-Transaction-Mistake-poster-page-105x140.jpg 105w, https:\/\/in.nttdatapay.com\/blog\/wp-content\/uploads\/2024\/03\/What-Are-UPI-Transaction-Mistake-poster-page-311x414.jpg 311w, https:\/\/in.nttdatapay.com\/blog\/wp-content\/uploads\/2024\/03\/What-Are-UPI-Transaction-Mistake-poster-page-149x199.jpg 149w, https:\/\/in.nttdatapay.com\/blog\/wp-content\/uploads\/2024\/03\/What-Are-UPI-Transaction-Mistake-poster-page-60x80.jpg 60w, https:\/\/in.nttdatapay.com\/blog\/wp-content\/uploads\/2024\/03\/What-Are-UPI-Transaction-Mistake-poster-page-150x200.jpg 150w\"\n\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\tsizes=\"auto, (max-width: 640px) 100vw, 640px\"\n\t\t\t\t\t\t\t\t\t\t\t\tloading=\"lazy\"\n\t\t\t\t\t\tdecoding=\"async\"\n\t\t\t\t\t>\n\t\t\t\t<\/a>\n\t\t\t<\/div>\n\t\t\t\t\t\t<\/div>\n\t\t\t\t\t\t<div\n\t\t\t\tclass=\"web-stories-list__story\"\n\t\t\t\tdata-wp-interactive=\"web-stories-block\"\n\t\t\t\tdata-wp-context='{\"instanceId\":1}'\t\t\t\tdata-wp-on--click=\"actions.open\"\n\t\t\t\tdata-wp-on-window--popstate=\"actions.onPopstate\"\n\t\t\t\t>\n\t\t\t\t\t\t\t<div class=\"web-stories-list__story-poster\">\n\t\t\t\t<a href=\"https:\/\/in.nttdatapay.com\/blog\/web-stories\/book-tickets-on-irctc-with-international-debit-credit-cards\/\" >\n\t\t\t\t\t<img\n\t\t\t\t\t\tsrc=\"https:\/\/in.nttdatapay.com\/blog\/wp-content\/uploads\/2024\/03\/Book-Tickets-on-IRCTC-with-International-Debit-Credit-Cards-640x853.jpg\"\n\t\t\t\t\t\talt=\"Book Tickets on IRCTC with International Debit &#038; Credit Cards\"\n\t\t\t\t\t\twidth=\"185\"\n\t\t\t\t\t\theight=\"308\"\n\t\t\t\t\t\t\t\t\t\t\t\t\tsrcset=\"https:\/\/in.nttdatapay.com\/blog\/wp-content\/uploads\/2024\/03\/Book-Tickets-on-IRCTC-with-International-Debit-Credit-Cards.jpg 640w, https:\/\/in.nttdatapay.com\/blog\/wp-content\/uploads\/2024\/03\/Book-Tickets-on-IRCTC-with-International-Debit-Credit-Cards-105x140.jpg 105w, https:\/\/in.nttdatapay.com\/blog\/wp-content\/uploads\/2024\/03\/Book-Tickets-on-IRCTC-with-International-Debit-Credit-Cards-311x414.jpg 311w, https:\/\/in.nttdatapay.com\/blog\/wp-content\/uploads\/2024\/03\/Book-Tickets-on-IRCTC-with-International-Debit-Credit-Cards-149x199.jpg 149w, https:\/\/in.nttdatapay.com\/blog\/wp-content\/uploads\/2024\/03\/Book-Tickets-on-IRCTC-with-International-Debit-Credit-Cards-60x80.jpg 60w, https:\/\/in.nttdatapay.com\/blog\/wp-content\/uploads\/2024\/03\/Book-Tickets-on-IRCTC-with-International-Debit-Credit-Cards-150x200.jpg 150w\"\n\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\tsizes=\"auto, (max-width: 640px) 100vw, 640px\"\n\t\t\t\t\t\t\t\t\t\t\t\tloading=\"lazy\"\n\t\t\t\t\t\tdecoding=\"async\"\n\t\t\t\t\t>\n\t\t\t\t<\/a>\n\t\t\t<\/div>\n\t\t\t\t\t\t<\/div>\n\t\t\t\t\t\t<div\n\t\t\t\tclass=\"web-stories-list__story\"\n\t\t\t\tdata-wp-interactive=\"web-stories-block\"\n\t\t\t\tdata-wp-context='{\"instanceId\":1}'\t\t\t\tdata-wp-on--click=\"actions.open\"\n\t\t\t\tdata-wp-on-window--popstate=\"actions.onPopstate\"\n\t\t\t\t>\n\t\t\t\t\t\t\t<div class=\"web-stories-list__story-poster\">\n\t\t\t\t<a href=\"https:\/\/in.nttdatapay.com\/blog\/web-stories\/how-to-create-a-payment-gateway-api\/\" >\n\t\t\t\t\t<img\n\t\t\t\t\t\tsrc=\"https:\/\/in.nttdatapay.com\/blog\/wp-content\/uploads\/2024\/03\/How-To-Create-a-Payment-Gateway-api-poster-page-640x853.jpg\"\n\t\t\t\t\t\talt=\"How To Create a Payment Gateway API?\"\n\t\t\t\t\t\twidth=\"185\"\n\t\t\t\t\t\theight=\"308\"\n\t\t\t\t\t\t\t\t\t\t\t\t\tsrcset=\"https:\/\/in.nttdatapay.com\/blog\/wp-content\/uploads\/2024\/03\/How-To-Create-a-Payment-Gateway-api-poster-page.jpg 640w, https:\/\/in.nttdatapay.com\/blog\/wp-content\/uploads\/2024\/03\/How-To-Create-a-Payment-Gateway-api-poster-page-105x140.jpg 105w, https:\/\/in.nttdatapay.com\/blog\/wp-content\/uploads\/2024\/03\/How-To-Create-a-Payment-Gateway-api-poster-page-311x414.jpg 311w, https:\/\/in.nttdatapay.com\/blog\/wp-content\/uploads\/2024\/03\/How-To-Create-a-Payment-Gateway-api-poster-page-149x199.jpg 149w, https:\/\/in.nttdatapay.com\/blog\/wp-content\/uploads\/2024\/03\/How-To-Create-a-Payment-Gateway-api-poster-page-60x80.jpg 60w, https:\/\/in.nttdatapay.com\/blog\/wp-content\/uploads\/2024\/03\/How-To-Create-a-Payment-Gateway-api-poster-page-150x200.jpg 150w\"\n\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\tsizes=\"auto, (max-width: 640px) 100vw, 640px\"\n\t\t\t\t\t\t\t\t\t\t\t\tloading=\"lazy\"\n\t\t\t\t\t\tdecoding=\"async\"\n\t\t\t\t\t>\n\t\t\t\t<\/a>\n\t\t\t<\/div>\n\t\t\t\t\t\t<\/div>\n\t\t\t\t\t\t\t\t<\/div>\n\t\t\t\t\t<div tabindex=\"0\" aria-label=\"Previous\" class=\"glider-prev\"><\/div>\n\t\t\t\t\t<div tabindex=\"0\" aria-label=\"Next\" class=\"glider-next\"><\/div>\n\t\t\t\t\t\t\t\t<\/div>\n\t\t<\/div>\n\t\t\r\n<h2><span style=\"font-weight: 400;\">What are The Types of Merchant Fraud?<\/span><\/h2>\r\n<p><span style=\"font-weight: 400;\">The following are the four common types of merchant fraud.<\/span><\/p>\r\n<h3><span style=\"font-weight: 400;\">1. Bust-out Fraud\u00a0<\/span><\/h3>\r\n<p><span style=\"font-weight: 400;\">One of the most damaging types of merchant fraud is known as bust-out fraud. With this scheme, a fraudster will establish a new business and build up its credit profile over several months by making regular, small purchases from suppliers and paying the bills on time.\u00a0<\/span> \u00a0<\/p>\r\n<p><span style=\"font-weight: 400;\">Once the <a href=\"https:\/\/in.nttdatapay.com\/blog\/what-are-one-click-payments\/\">business has a positive payment<\/a> history, the fraudster will dramatically increase their orders from various merchants and suppliers. However, instead of paying the large invoices, the fraudster simply shuts down the business and disappears, leaving merchants with huge unpaid bills.\u00a0<\/span> \u00a0<\/p>\r\n<h3><span style=\"font-weight: 400;\">2. Transaction Laundering or Factoring\u00a0<\/span><\/h3>\r\n<p><span style=\"font-weight: 400;\">Another common merchant fraud scheme involves &#8220;transaction laundering or factoring.&#8221; In this scam, fraudsters will make legitimate purchases from an online merchant using stolen credit cards.\u00a0<\/span> \u00a0 <span style=\"font-weight: 400;\">However, instead of having the goods shipped to the cardholder&#8217;s address, they request the items be shipped elsewhere. The fraudsters then sell those goods for cash at a discount to fence operations willing to buy stolen merchandise.\u00a0<\/span> \u00a0<\/p>\r\n<h3><span style=\"font-weight: 400;\">3. Identity Swap Fraud<\/span><\/h3>\r\n<p><span style=\"font-weight: 400;\">An identity swap fraud scheme involves fraudsters utilising stolen identities to open new business accounts. They will take over an existing, legitimate business by posing as the owner and requesting changes be made, such as updating the company profile, payment details, or authorised users. This allows them to intercept payments, place and receive new orders, or drain existing balances.<\/span> \u00a0<\/p>\r\n<h3><span style=\"font-weight: 400;\">4. Business Remodelling Fraud<\/span><\/h3>\r\n<p><span style=\"font-weight: 400;\">In a business remodelling fraud, a scammer will set up a small business. They will then use the business&#8217; positive payment history. Once the KYC is complete &amp; a credit profile is established the fraudster places large fraudulent orders. To avoid detection, the fraudster may keep the authentic business name, website, and contact details unchanged at first.\u00a0<\/span> \u00a0<\/p>\r\n<h2><span style=\"font-weight: 400;\">How to Handle Merchant Fraud?<\/span><\/h2>\r\n<p><span style=\"font-weight: 400;\">By following these methods, you can protect your business from merchant fraud.<\/span><\/p>\r\n<h3><span style=\"font-weight: 400;\">1. Bust-out Fraud\u00a0<\/span><\/h3>\r\n<p><span style=\"font-weight: 400;\">To prevent bust-out fraud, merchants need to thoroughly vet new business customers before extending them large lines of credit. Run background and credit checks, verify business licenses and registration, and ask for personal guarantees from business owners.\u00a0<\/span> \u00a0<\/p>\r\n<p><span style=\"font-weight: 400;\">Any new account that abruptly and unpredictably increases spending should be avoided. Set reasonable credit <a href=\"https:\/\/in.nttdatapay.com\/blog\/why-do-contactless-payment-limit-matters\/\">limits based on payment<\/a> history and gradually increase limits over time as trust is built. Stay alert for any signs a customer may be preparing to close up shop.<\/span> \u00a0<\/p>\r\n<h3><span style=\"font-weight: 400;\">2. Transaction Laundering or Factoring\u00a0<\/span><\/h3>\r\n<p><span style=\"font-weight: 400;\">Merchants can help prevent this type of fraud by carefully verifying all shipping addresses match the billing address on the payment method used. Require identification verification for high-value orders or any requests to deviate from the standard shipping location.\u00a0<\/span> \u00a0<\/p>\r\n<p><span style=\"font-weight: 400;\">Monitor for multiple orders using the same payment method but with different shipping addresses. Be wary of customers repeatedly requesting rush shipping or expedited delivery.<\/span> \u00a0<\/p>\r\n<h3><span style=\"font-weight: 400;\">3. Identity Swap Fraud<\/span><\/h3>\r\n<p><span style=\"font-weight: 400;\">To counter identity swap fraud, merchants must have strong identity verification procedures in place. Cross-check sensitive details like business registration numbers, tax IDs, physical addresses, phone numbers and more to confirm the identity of any existing customer requesting changes.\u00a0<\/span> \u00a0<\/p>\r\n<p><span style=\"font-weight: 400;\">Use multi-factor authentication where possible. Monitor accounts for suspicious login activity from new devices or locations. Notify actual business owners of any altered account details.<\/span> \u00a0<\/p>\r\n<h3><span style=\"font-weight: 400;\">4. Business Remodelling Fraud<\/span><\/h3>\r\n<p><span style=\"font-weight: 400;\">Merchants can reduce their vulnerability to business remodelling fraud by staying up-to-date on customer ownership changes. Request prompt notification from businesses about any sales, mergers or new management. Verify the identities of any new principals.\u00a0<\/span> \u00a0<\/p>\r\n<p><span style=\"font-weight: 400;\">Watch for inconsistencies in order volumes, payment patterns or product mix compared to past purchase behaviour. Consider re-evaluating credit limits following significant operational changes at a client firm.<\/span> \u00a0<\/p>\r\n<h2><span style=\"font-weight: 400;\">Secure Your Online Payments with NTT DATA Payment Services<\/span><\/h2>\r\n<p><span style=\"font-weight: 400;\">At NTT DATA Payment Services, we understand the challenges merchants face from fraudulent activities. As a leader in <a href=\"https:\/\/in.nttdatapay.com\/blog\/auto-debit-vs-manual-payment-processing\/\">payment processing<\/a> and risk management solutions, we help businesses of all sizes detect, investigate, and prevent fraud.<\/span> \u00a0<\/p>\r\n<p><a href=\"https:\/\/www.nttdatapay.com\/\" target=\"_blank\" rel=\"noopener\"><span style=\"font-weight: 400;\">NTT DATA Payment Services<\/span><\/a><span style=\"font-weight: 400;\"> offers a complete payment solution to advance both your offline and online businesses <\/span>from, <span style=\"font-weight: 400;\"><!-- \/wp:post-content -->\r\n\r\n<!-- wp:list --><\/span><\/p>\r\n<ul><!-- wp:list-item -->\r\n<li><a href=\"https:\/\/www.nttdatapay.com\/online-payment-gateway-india\" target=\"_blank\" rel=\"noopener\">Online Payment Gateway in India<\/a><\/li>\r\n<!-- \/wp:list-item -->\r\n\r\n<!-- wp:list-item -->\r\n<li><a href=\"https:\/\/www.nttdatapay.com\/swipecard-pos-machine\" target=\"_blank\" rel=\"noopener\">POS machines<\/a><\/li>\r\n<!-- \/wp:list-item -->\r\n\r\n<!-- wp:list-item -->\r\n<li><a href=\"https:\/\/www.nttdatapay.com\/ivr-payment-system\" target=\"_blank\" rel=\"noopener\">IVR payments<\/a><\/li>\r\n<!-- \/wp:list-item -->\r\n\r\n<!-- wp:list-item -->\r\n<li>Mobile applications, and<\/li>\r\n<!-- \/wp:list-item -->\r\n\r\n<!-- wp:list-item -->\r\n<li><a href=\"https:\/\/in.nttdatapay.com\/blog\/bharat-qr-code-how-it-works-and-benefits\/\">Bharat QR Scan and Pay<\/a><\/li>\r\n<!-- \/wp:list-item --><\/ul>\r\n<p><span style=\"font-weight: 400;\"><!-- \/wp:list -->\r\n\r\n<!-- wp:paragraph --><\/span> We <span style=\"font-weight: 400;\">ensure maximum comfort, convenience, and safety for all your payments.<\/span> \u00a0<\/p>\r\n<h2><span style=\"font-weight: 400;\">Staying One Step Ahead of Fraudsters<\/span><\/h2>\r\n<p><span style=\"font-weight: 400;\">By educating yourself on the most prevalent types of merchant fraud like these, businesses can take proactive steps to strengthen their fraud prevention controls. A layered approach using identity verification, transaction monitoring, and risk-based authorisation can help merchants avoid becoming victims of fraud while still providing excellent customer experiences.\u00a0<\/span> \u00a0<\/p>\r\n<p><span style=\"font-weight: 400;\">Staying vigilant yet balancing <\/span><span style=\"font-weight: 400;\">security<\/span><span style=\"font-weight: 400;\"> with convenience will help protect the bottom line from fraudulent losses. With diligence and the right tools, merchants can stay one step ahead of would-be fraudsters seeking to exploit vulnerabilities.<\/span><\/p>\r\n<!-- \/wp:paragraph -->\r\n\r\n<!-- wp:table -->\r\n<figure class=\"wp-block-table\">\r\n<table>\r\n<tbody>\r\n<tr>\r\n<td style=\"text-align: center;\"><em>Also, you can get frequent updates on <a href=\"https:\/\/www.instagram.com\/nttdatapayments\/\" target=\"_blank\" rel=\"noopener\">nttdatapayments<\/a> Instagram page.<\/em><\/td>\r\n<\/tr>\r\n<\/tbody>\r\n<\/table>\r\n<\/figure>\r\n<h3 style=\"text-align: center;\"><span style=\"font-weight: 400;\">Types of Merchant Fraud: FAQs<\/span><\/h3>\r\n<h4><span style=\"font-weight: 400;\">1. What is merchant fraud?<\/span><\/h4>\r\n<p><span style=\"font-weight: 400;\">Merchant fraud occurs when a merchant or vendor commits deception in a business transaction by billing for undelivered goods\/services, falsifying customer info, or processing transactions for counterfeit goods.<\/span><\/p>\r\n<h4><span style=\"font-weight: 400;\">2. What are the common types of merchant fraud?<\/span><\/h4>\r\n<p><span style=\"font-weight: 400;\">The 4 major types discussed are bust-out fraud, transaction laundering, identity swap fraud, and business remodelling fraud.<\/span><\/p>\r\n<h4><span style=\"font-weight: 400;\">3. How can merchants prevent bust-out fraud?\u00a0\u00a0<\/span><\/h4>\r\n<p><span style=\"font-weight: 400;\">Merchants should thoroughly vet new business customers, run background checks, verify licenses, set credit limits, and monitor for abrupt spending increases.<\/span><\/p>\r\n<h4><span style=\"font-weight: 400;\">4. How can merchants prevent transaction laundering?<\/span><\/h4>\r\n<p><span style=\"font-weight: 400;\">Merchants should carefully verify shipping addresses match billing addresses, require ID for high-value\/special orders, and monitor for repeat orders with different shipping locations.\u00a0<\/span><\/p>\r\n<h4><span style=\"font-weight: 400;\">5. What tools can help merchants detect and prevent fraud?<\/span><\/h4>\r\n<p><span style=\"font-weight: 400;\">Implementing identity verification, transaction monitoring, risk-based authorisation, and working with a payment processor that offers fraud detection\/prevention solutions.<\/span><\/p><!-- AddThis Advanced Settings generic via filter on the_content --><!-- AddThis Share Buttons generic via filter on the_content -->","protected":false},"excerpt":{"rendered":"<p>Fraudsters constantly devise new techniques to exploit merchants and steal customer payment details. In this blog post, we will explore four major types of merchant fraud and how to handle&#8230; <!-- AddThis Advanced Settings generic via filter on get_the_excerpt --><!-- AddThis Share Buttons generic via filter on get_the_excerpt --><\/p>\n","protected":false},"author":1,"featured_media":4798,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[17,16],"tags":[179],"class_list":["post-4436","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-general","category-payment","tag-types-of-merchant-fraud"],"_links":{"self":[{"href":"https:\/\/in.nttdatapay.com\/blog\/wp-json\/wp\/v2\/posts\/4436","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/in.nttdatapay.com\/blog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/in.nttdatapay.com\/blog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/in.nttdatapay.com\/blog\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/in.nttdatapay.com\/blog\/wp-json\/wp\/v2\/comments?post=4436"}],"version-history":[{"count":3,"href":"https:\/\/in.nttdatapay.com\/blog\/wp-json\/wp\/v2\/posts\/4436\/revisions"}],"predecessor-version":[{"id":4463,"href":"https:\/\/in.nttdatapay.com\/blog\/wp-json\/wp\/v2\/posts\/4436\/revisions\/4463"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/in.nttdatapay.com\/blog\/wp-json\/wp\/v2\/media\/4798"}],"wp:attachment":[{"href":"https:\/\/in.nttdatapay.com\/blog\/wp-json\/wp\/v2\/media?parent=4436"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/in.nttdatapay.com\/blog\/wp-json\/wp\/v2\/categories?post=4436"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/in.nttdatapay.com\/blog\/wp-json\/wp\/v2\/tags?post=4436"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}