What is corporate credit card fraud?

Corporate credit card fraud is an illegal activity where an employee or fraudster outside a business uses details from a corporate credit card for misuse, making purchases, withdrawing cash, or performing any unauthorized transactions for personal gain.

Common sources of corporate credit card fraud

While not an exhaustive list, fraudsters use several common tactics when attempting to gather business credit card information.

Card-not-present fraud

The most common card fraud here is that criminals may gain access to corporate card details or an account holder’s information – account numbers, credit card numbers, you name it – through various means, including hacking, skimming, or phishing.

In the case of fraudsters outside your company targeting your funds, your card doesn't have to be physically stolen; it could be cloned, skimmed, or obtained online or through phishing scams. Small businesses are particularly susceptible to credit card fraud.

Skimming

This happens when fraudsters use a card-skimming or card reader device on ATMs or point-of-sale (POS) terminals to capture the data from the card’s magnetic stripe or chips (with EMV chip cards).

They then create counterfeit cards using this data. This can also include fraudsters using sophisticated scanning devices just by walking near an individual without an RFID wallet.

Businesses should be vigilant when using their cards, especially at unfamiliar ATMs or locations.

Lost or stolen cards

If a business credit card is physically lost or stolen, it can be used for unauthorized transactions, which is a common, however easy, method of conducting fraud.

It's crucial to report a lost or stolen card immediately to the bank so the card can be canceled. In cases where virtual card information has been compromised, it can still be used for fraudulent e-commerce transactions.

Intercepted mail

If a new or replacement card is sent via mail, there's a risk it can be intercepted and then used fraudulently.

Mailing cards to a secure and confirmed business address can help mitigate this risk.

Card tampering

A fraudster might tamper with a new credit card during production or delivery or with an existing card if it is momentarily out of the cardholder’s possession.

Businesses should inspect cards upon delivery and monitor all transactions, especially when cards are returned after use.

Insider misuse

Corporate credit card fraud can sometimes be perpetrated by current or former employees with access to sensitive financial information. Employees trusted with company credit cards may use them for personal expenses, covering them up as business expenses.

For example, a former Jacksonville Jaguars employee allegedly stole $22M from the team using corporate credit cards, hiding expenses by submitting false expense reports.

This could occur with physical cards assigned to employees for business use. Regularly reviewing the transaction history could help identify any misuse.

Phishing

As we covered in our first blog post in this series, one method that fraudsters use to obtain your card credentials is phishing.

Crafty fraudsters may masquerade as reputable vendors or even imitate your CEO in text messages, attempting to trick you into sharing your card information.

They can also lure you into clicking links in seemingly harmless emails, leading you to counterfeit websites where you're asked to key in your card details.

Be aware of these deceptive practices to safeguard your financial information.

How to protect your business from corporate credit card fraud

Fortunately, there are several tried-and-true techniques you can use to help keep your business safe.

Have an expense policy in the first place.

This is a critical first step to effective corporate spend management for a few reasons.

First, it sets rules and guidelines so your employees aren’t left guessing what is and isn’t compliant (a common struggle for employees).

However, more pertinent to this case, building an expense policy helps foster engagement among multiple stakeholders internally, so there is an expectation that spend management does not fall on a single person; it’s a team's responsibility.

Monitor transactions

Keep a close eye on your card activity on your credit card statements and frequently review your transactions.

Immediately detecting any unusual activity and reporting to Rho will help us take immediate action.

Secure your information

Be cautious while sharing your card details.

Avoid giving out information in emails or over the phone unless you know the receiver's identity.

Beware of phishing

Be cautious of emails or text messages asking you to provide or verify personal or financial information.

Legitimate businesses usually don't request sensitive information via email or text.

Use secure networks

Be careful when using public Wi-Fi. Avoid accessing your card credentials if possible unless you're connected to a secure, private network.

Never store card credentials in your computer that can be susceptible to a bad actor that gets access to the computer and retrieves the information.  

Report lost or stolen credit cards

Contact your card provider immediately if you lose your credit card or notice warning signs that it's been stolen.

Quick actions can prevent unauthorized charges and enable Rho to take immediate action.

Report to the FTC

If your card has been compromised, file a local police report and contact the Federal Trade Commission to submit a complaint.

You can also set up a fraud alert and get a copy of your business credit report to review by contacting a credit bureau.

How the Rho platform helps prevent business credit card fraud

Unfortunately, fraudsters can be savvy, meaning the above best practices don’t offer perfect protection against business credit card fraud.

The good news is the Rho platform offers several card security features, spend controls, and real-time reporting you can use to add a layer of fraud protection and spend control for your business.

Pre-Set Card Limits

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When you create a new virtual Rho Card, you can select from three card limit types:

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Merchant Controls

In this step of the Rho Card creation process, you have two options you can take advantage of – merchant-level controls and spend category controls. 

Merchant-Level Controls

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In the Merchant Control feature, a cardholder can list which merchants they would transact with. If a merchant is not on this list, this control would decline fraudulent transactions, thus protecting the cardholder.

This feature works hand-in-hand with others listed, creating a tailored experience that helps CFOs and finance teams control organization spend and limit security risks.

You can pre-program Rho Cards only to be accepted at a specific list of merchants (up to 20), limiting your security risk exposure.

For instance, one everyday use case we see with customers like Anti Agency Group is assigning individual Rho Cards to manage spend on platforms like Facebook, Google, and TikTok.

Spending Category Controls

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With this feature, you can configure controls on the macro level, meaning if there is a particular sector/industry that your business regularly conducts business with, you can set those industries, and other industries that deviate from your list will be blocked.

For example, you can select ‘Airlines’, ‘Air Carriers and Airports’, and ‘Flying’ categories if you want the card only used for air travel company expenses.

Custom active dates (virtual Rho Cards only)

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Virtual Rho Cards with this feature enabled will only be accepted during date ranges that you specify.

For instance, you could give a contractor a corporate card for the 3 months they’re with the company and want the card’s expiration date to align with when their contract ends.

This prevents any security-related events from occurring after that period, further reducing your organization’s corporate card surface area in case you forget about one-off cards.

International Spend Permissions

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Your cardholder can easily toggle international card spend within the Rho App. This can be used when you're based in the US, and your business does not transact internationally.

Smart Notifications

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Your cardholder can turn on notifications, such that any in-person or online transactions made on your Rho Card would receive a push notification via SMS or text asking you to upload a receipt.

This can be useful if your card becomes compromised and a fraudster conducts a transaction that your cardholder does not recognize, and the cardholder can then take immediate action by locking or canceling the card.

Lock and cancel your Rho Card

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If your cardholder's card is lost or stolen, they can immediately log on to the Rho app to lock or cancel the card immediately, preventing unauthorized purchases.

Secure card detail sharing

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Rho Card users can share their card details with colleagues and vendors via the Rho platform.

You send a one-time access link to the desired email recipient, who can use the card if needed. No need to share sensitive details over the phone or other unsecure methods like text, email, or Slack.

Wrap-up: Prevent corporate credit card fraud

By pairing best practices with Rho’s expense management features, business owners and finance teams can protect their companies from card fraud if they become stolen or compromised based on the easy configuration within the Rho App.

At Rho, the safety and protection of your account are our top priorities, and we monitor your card transactions to detect unusual activity or card misuse.

While we do everything we can to detect and decline those card transactions that appear unusual, businesses need to understand how bad actors obtain your card information so you can avoid corporate credit card abuse.

Discover why companies like Native Strategies choose Rho to manage employee spending and reimbursements securely and with ease.

FAQs: Business credit card fraud prevention

What is a chargeback?

A chargeback occurs when a cardholder disputes a transaction due to fraudulent activity or other issues, prompting the card payments network to reverse the transaction during payment processing.

This serves as consumer and business protection, offering an additional layer of authentication to prevent fraudulent charges and reduce damages caused by credit card account data breaches or identity theft.

What is a credit card issuer?

A credit card issuer, often a credit card company or a bank, provides consumers with credit or debit cards, enabling them to make transactions.

These issuers, which include companies like Visa and Mastercard, manage the card’s functions and regulate its transactions.