Avoid Fraud in Credit Transactions
Posted: Thu Jan 23, 2025 8:21 am
Could the credit policies you use in your store's credit system influence possible payment fraud?
Have you ever stopped to think about this subject?
I often talk to store owners all over Brazil. In some situations, I see store owners who are struggling with high default rates , others who want to expand their credit operations, but it is still rare that I come across store owners who are suffering from fraud in their own credit operations, especially among shoe sellers and opticians. But is there anything we can do to prevent it?
Although it is not that common, this is a subject that we need to pay attention to. Therefore, I decided to do a more in-depth study to identify when this occurs.
There is no single solution, but this article will help you rethink your practices, ok?
So, let's take a closer look at credit policies. What do you think about understanding this?
Happy reading!
IS IT POSSIBLE TO AVOID CUSTOMER FRAUD IN RETAIL?
The first thing to consider is that no company is free from lawyer database fraudulent actions, however, there are some measures that can be applied to try to avoid fraud and have a healthier relationship in your business. To do this, it is important to know good practices to increase business security.
Check out some of the main practices now:
HAVE A CREDIT AND COLLECTION POLICY;
INVEST IN TRAINING YOUR TEAM;
LOOK FOR GOOD TECHNOLOGICAL RESOURCES;
ANALYZE CUSTOMER PURCHASE HISTORY;
ENSURE COMPLIANCE WITH LGPD.
These are just some of the points that can make a big difference in the security of your payments. Applying them to your daily routine can be a real “helping hand”.
CUSTOMER QUALITY X FRAUD:
I want to try to explain it in an easy-to-understand way so that everyone can better understand what can happen in a fraudulent transaction. Typically, stores that charge very high interest rates on installments end up suffering from fraud.
This happens because these are people who have very easy credit. After all, they think they are earning a significant amount, but in reality the interest rates are higher precisely to provide greater financial security for the seller. If these stores were to remove this high interest rate and only calculate the capital paid, many of these stores would end up having a default rate of over 15% or even 20%, which is a very high default rate.
In this case, the store owner loses in two ways: by encouraging sales from customers who are not good payers with high interest rates, and by also losing out in lawsuits. After all, if the store owner is suffering from fraud, he will consequently be suffering from lawsuits for moral damages by the original owner of the registration who will take legal action against the store.
There are two situations that need to be avoided in this case: the customer “thinking” that he is cheating the store owner and the store owner trying to earn a lot more with high interest rates. These are two very harmful situations that can affect your good customers.
On the other hand, there are stores that end up charging very low interest rates. This is also not a good case, because the store ends up not having any revenue from the credit operation and this also makes it impossible for the store to take a little more risk in some situations.
How not to have a conservative operation
Based on this, we arrive at a point that is considered ideal and fair: the famous middle ground. Here it will depend a lot on the creativity of the store owner (not charging interest up to 3x or some other way that seems interesting to them).
In this case, the retailer will have to do something to work with interest rates in a safer place. This will allow your store to be less conservative, but it can still be a little more aggressive.
You can make larger installments depending on the customer's credit analysis . Remember that this is for those who really need it and not for all types of customers. Offer facilities for those who can pay in fewer installments and interest for those who have greater needs. This interest is only to ensure greater security for the business.
By being fair without sacrificing the customer, you ensure greater loyalty and greater credibility in the store.
Have you ever stopped to think about this subject?
I often talk to store owners all over Brazil. In some situations, I see store owners who are struggling with high default rates , others who want to expand their credit operations, but it is still rare that I come across store owners who are suffering from fraud in their own credit operations, especially among shoe sellers and opticians. But is there anything we can do to prevent it?
Although it is not that common, this is a subject that we need to pay attention to. Therefore, I decided to do a more in-depth study to identify when this occurs.
There is no single solution, but this article will help you rethink your practices, ok?
So, let's take a closer look at credit policies. What do you think about understanding this?
Happy reading!
IS IT POSSIBLE TO AVOID CUSTOMER FRAUD IN RETAIL?
The first thing to consider is that no company is free from lawyer database fraudulent actions, however, there are some measures that can be applied to try to avoid fraud and have a healthier relationship in your business. To do this, it is important to know good practices to increase business security.
Check out some of the main practices now:
HAVE A CREDIT AND COLLECTION POLICY;
INVEST IN TRAINING YOUR TEAM;
LOOK FOR GOOD TECHNOLOGICAL RESOURCES;
ANALYZE CUSTOMER PURCHASE HISTORY;
ENSURE COMPLIANCE WITH LGPD.
These are just some of the points that can make a big difference in the security of your payments. Applying them to your daily routine can be a real “helping hand”.
CUSTOMER QUALITY X FRAUD:
I want to try to explain it in an easy-to-understand way so that everyone can better understand what can happen in a fraudulent transaction. Typically, stores that charge very high interest rates on installments end up suffering from fraud.
This happens because these are people who have very easy credit. After all, they think they are earning a significant amount, but in reality the interest rates are higher precisely to provide greater financial security for the seller. If these stores were to remove this high interest rate and only calculate the capital paid, many of these stores would end up having a default rate of over 15% or even 20%, which is a very high default rate.
In this case, the store owner loses in two ways: by encouraging sales from customers who are not good payers with high interest rates, and by also losing out in lawsuits. After all, if the store owner is suffering from fraud, he will consequently be suffering from lawsuits for moral damages by the original owner of the registration who will take legal action against the store.
There are two situations that need to be avoided in this case: the customer “thinking” that he is cheating the store owner and the store owner trying to earn a lot more with high interest rates. These are two very harmful situations that can affect your good customers.
On the other hand, there are stores that end up charging very low interest rates. This is also not a good case, because the store ends up not having any revenue from the credit operation and this also makes it impossible for the store to take a little more risk in some situations.
How not to have a conservative operation
Based on this, we arrive at a point that is considered ideal and fair: the famous middle ground. Here it will depend a lot on the creativity of the store owner (not charging interest up to 3x or some other way that seems interesting to them).
In this case, the retailer will have to do something to work with interest rates in a safer place. This will allow your store to be less conservative, but it can still be a little more aggressive.
You can make larger installments depending on the customer's credit analysis . Remember that this is for those who really need it and not for all types of customers. Offer facilities for those who can pay in fewer installments and interest for those who have greater needs. This interest is only to ensure greater security for the business.
By being fair without sacrificing the customer, you ensure greater loyalty and greater credibility in the store.