Small companies to face challenges after Target breach
Many New Jersey consumers were victims of the recent credit and debit card data theft involving national retailer Target. Even though 70 million consumers were affected, the breach will likely affect small businesses even more.
One company estimates that for every $100 of fraud loss, a company loses a total of $279. This is due to costs associated with chargebacks. This kind of loss can add up quickly and be crushing to a small family owned business. Plus, small companies may see money frozen for two weeks or longer due to an investigation. This can lead a company unable to pay employees and vendors or buy day-to-day items to operate a business.
The Target breach also negatively affects small businesses because it may be easier for fraudsters to hide fraudulent charges on business accounts. This is because businesses could have thousands of transaction in a week, or even a day. In addition, the charges could be of varying amounts. Plus, many small business accounts are treated the same as consumer accounts. Small companies could still be on the hook for unauthorized charges.
It is not a common occurrence to have a hacker steal credit card information from a merchant, but it does happen. Almost all companies rely on debit and credit cards to pay for business expenses, so it may not be a reasonable approach to eliminate card use altogether. However, paying with cash or a check can help eliminate these problems. Small business owners may also want to try working with their bank to ensure that they are not held responsible for all fraudulent charges and that at least some of their assets can be used after such as breach. This will allow business to keep running smoothly.
Source: Credit Union Times, " Small Businesses More Vulnerable After Target Breach," Michelle A. Samaad, Jan. 17, 2013