Business credit cards don’t come by default with the same protections as personal credit cards and the risks of them being stolen are higher due to employee use. Here’s how to protect your company in the case of business card theft.
A stolen credit card can be a headache to deal with, not to mention a financial pain if the thief uses your card to make fraudulent purchases. It’s not just your personal cards that are vulnerable to theft either.
“A small business credit card can be compromised the same way as a personal card,” says Uri Abramson, co-founder of financial review site Overdraft Apps. “Business card fraud is even more dangerous than personal card fraud because Fair Credit Billing Act protections don’t cover business cards automatically.”
If you rely on business credit cards to keep your business running smoothly, use these tips to protect yourself against theft.
Stolen credit card: 6 ways to protect yourself
Know how business credit cards can be compromised
Business credit card theft can happen in several ways, including:Masters Touch Pest Solutions, a small pest control business located in Pennsylvania, has dealt with a stolen business credit card before and says it’s the simple scams that tend to be most common.
He says skimmers – which can be found at ATMs, gas stations, parking meters and vending machines — are often a culprit of small business card theft. You could also fall victim to theft in everyday spending situations.
“If your credit card is out of your sight, you have the chance of your information being stolen,” says Sameth.
He uses the example of taking clients or employees out to dinner and letting the server or bartender handle your card to process payment. Once the card is in their hands, they could easily access your card’s data using a pocket-size skimmer.
Then there are data breaches to consider. If you regularly use your card at your favorite office supply store, for example, and the retailer’s point of sale system is compromised, that could put your card information at risk.
Manage theft risk for employee cards
Small business credit card theft can also happen closer to home if you’ve issued cards on your business account to staff members.
“Employee misuse is one of the most common ways a small business credit card can be compromised,” says Jacqueline Devereux, a credit card expert at finance site SproutCents.
Employee card abuse typically takes one of two forms:
- Charging personal expenses to the card.
- Taking cash advances against the card’s credit limit.
Either way, it can add up to financial losses for your business since you’re responsible for the debt as the primary cardholder.
Devereux says that if you have multiple employee cards, detecting fraud or theft can be more difficult when there’s a large transaction volume each month.
Her tips for combating employee card abuse include:
- Developing a clear policy that spells out what employees can and can’t charge.
- Setting a monthly spending limit for each card.
- Monitoring card statements to review employee spending.
Also, consider the character of the employee who’s using the card.
“Be thoughtful about who has access to your business accounts,” says Jenn Garbach, head of brand and marketing for small business card at Capital One.
See related: 5 business expense card options for employers
Understand your business credit card fraud protections
The Fair Credit Billing Act generally limits liability for unauthorized charges on personal cards to $50, but offering that same protection for business cards is optional for credit card companies.
“Most major credit card issuers offer zero liability for business card fraud, just as they do for personal cards,” says Abramson, but don’t assume yours does without reading the fine print.
This is a feature Sameth always checks for when opening new business card accounts.
“Because our employees have to put gas in their trucks or have routine maintenance performed on them, they need to have cards connected to our accounts,” he says. “If someone steals their information, we don’t want to be on the hook for the bill.”
Examples of business cards that feature zero liability fraud protection include:
- Chase Ink Business Unlimited Credit Card
- Bank of America® Business Advantage Cash Rewards Mastercard® credit card
- Capital One Spark Cash for Business
- SimplyCash® Plus Business Credit Card from American Express
- Discover it® Business Card
Abramson says the first line of defense in protecting your business credit with zero liability is to avoid commingling expenses.
“Don’t use your business cards for personal expenses and vice versa,” he says. “That’s important for more than one reason, but it will help avoid issues with zero liability coverage.”
One caveat to know: Zero liability fraud protections may be applied to small business credit cards, but not corporate cards. If your corporate card is stolen, your company may be fully liable for fraudulent charges.
Look for other card features to deter fraud
Besides zero liability protection, your card may offer other tools to help you monitor for and detect theft.
“Most business cards come with account alerts to spot irregular spending and monitor employee card use,” says Devereux.
Discover business cardholders can take advantage of Freeze It. The feature allows you to freeze the cards on your account, including employee cards, preventing new purchases if you suspect fraud.
American Express, Citi, Capital One and Wells Fargo also offer some type of on/off switch to temporarily stop new purchases from being made with your business and personal cards.
What to do if your small business card is stolen
If you think your business credit card has been stolen, act quickly.
“The first thing someone should do if they believe their card has been stolen or used fraudulently is to lock their card so that no one is able to use it,” says Garbach.
If your card offers this option, you may be able to do that online or through the card’s mobile app. The next step is reaching out to the credit card company directly to report suspected theft.
“You don’t want to delay,” says Sameth. “As soon as you notice your card missing, unusual charges on your card or packages you didn’t order start to show up, the best thing to do is call and get the card canceled.”
Once you’ve done that, report fraud to the business divisions of Equifax, Experian and TransUnion. You can set up a fraud alert on your accounts, which lets lenders know that they should verify your business and personal information before opening any new credit accounts in your name.
From there, you can report fraud to the Federal Trade Commission. Devereux also recommends filing a police report.
As you work with your credit card company or legal authorities to resolve fraud, keep a written record of any communications that you can refer to if needed.
Keep an eye on your business credit
Staying tuned in to where your business credit is being used in case you need to report fraud.
Sameth, for example, maintains a list of everywhere he’s stored his business card payment details online. “In the event that it’s stolen, we can quickly reach out to those merchants and update our payment method so service isn’t interrupted.”
Getting to know what’s on your business credit reports and reviewing them regularly are also important for detecting fraud, as well as finding inaccuracies on your credit reports.
“Because business credit is not tied to a unique identifier like a Social Security number, many business owners find misinformation in their business credit reports, which can impact them similarly to fraud,” says Garbach.
There are numerous companies that offer this service for free. Capital One, for example, recently launched Business CreditWise, a free tool that allows business owners to monitor their business credit reports for free and dispute any incorrect information. Nav is another free option for tracking your business credit profile.
Regardless of whether you use a monitoring service or check your business credit report manually, vigilance is key.
“Monitoring and safeguarding your credit information and financial accounts is the first step small business owners should take in protecting themselves from fraud and identity theft,” says Garbach.