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Mobile devices increasing opportunity for payment fraud

As more consumers and employees use their smartphones and tablets, the risk of payment fraud stemming from those devices increase for small- and medium-sized businesses, warns a new report from Javelin Strategy & Research.

The report offers a wide-ranging view of fraud threats faced not only by businesses but

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also financial institutions, which are advised not to include links in their e-mails to customers lest consumers be duped by criminals sending similar messages in attempts to steal identifying details. The report does not focus on e-commerce, but several parts could be useful to e-retailers striving to shore up their defenses against online scammers and thieves.

The report states that 2% of “micro and small business”- those with between $100,000 and $10 million in annual revenue – have experienced payment fraud via mobile devices within the past year.

For “middle-market” businesses – between $10 million and $500 million in annual revenue – the mobile payment fraud rate for the past 12 months is 1%. Those rates lag far behind fraud committed with such vehicles as checks (32% for micro and small businesses; 65% for middle-market businesses), credit cards (58%; 52%) and debit cards (20%; 23%).

But the report says mobile carries with it vulnerabilities not only from criminals outside organizations but employees using those devices for work tasks. Those could be disgruntled employees looking for payback but also employees using personal devices for work purposes who inadvertently download a virus.

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