Despite fraud’s high costs and losses, many organizations are afraid to fight it. These companies are concerned about the possible impact on customer trust, reputation, and revenue.
Fortunately, there are ways to combat this threat. One of the most effective is to build an anti-fraud wall around your business.
Loss of Customer Trust
The trust a customer places in your brand is crucial for building long-term relationships. Research shows that customers will stay loyal to brands that have established trust with them.
When that trust is broken, it’s easy for a customer to walk away. It’s one of the main reasons people leave romantic relationships and one of the biggest reasons businesses lose repeat business.
Companies that fight fraud like a chargeback recovery are likelier to win back their customers’ trust. But the first step is to understand why they lost it in the first place.
Loss of reputation
One of the most valuable resources for businesses is their reputation. It affects their brand image, employee morale, and customer satisfaction.
A reputation ruined by fraud like the common cnp fraud chargebacks can devastate your company. It can also be the subject of defamation lawsuits.
If you believe your reputation has been ruined by fraud, you must take action immediately. The law is on your side, and a team of attorneys can help you fight to regain your good name.
Fraud can damage a company’s reputation by exposing it to unfair media coverage or inaccurate reporting. This can be particularly damaging when the negative story covers only a few key areas, such as earnings or the personality of the CEO.Loss of revenue
Business fraud can have a significant impact on your organization. Organizations lose an average of 5% of their revenue to fraud, according to the Association of Certified Fraud Examiners (ACFE).
The most common type of business fraud is asset misappropriation. These frauds involve stealing cash or non-cash assets, such as making false expense reimbursement claims.
Corruption, the second most common type of business fraud, involves employees using their position or authority to influence business transactions for personal gain.
Financial statement fraud, which makes up less than five percent of fraud cases but causes the highest median loss, occurs when an employee purposefully omits or misstates information in company financial reports. This may include falsifying balance sheets, inflating assets or hiding liabilities.
A company’s reputation is crucial to its business model and can be destroyed quickly. Even small companies suffer from reputational damage if they make bad decisions or engage in questionable practices.
Aside from its business model, a company’s reputation is also impacted by external factors such as the regulatory environment. A company’s reputation is damaged when it fails to meet new regulatory requirements.
It’s a tricky balancing act that many businesses need help to achieve.
Loss of Competitive Advantage
Many businesses are afraid to fight fraud because they worry that their share price will decline and don’t want to hurt the company’s reputation. This fear is expected because the loss of a company’s assets and liabilities can put it in a financial bind, possibly leading to bankruptcy or a takeover by another firm.
In addition, the loss of a company’s share value can impact its investors and creditors, leading to lower interest rates and lower availability of capital. This can make it difficult for companies to grow and expand their business.
A company’s competitive advantage cannot be easily replicated, allowing it to achieve superior margins, a better growth profile or higher loyalty among existing customers. These benefits are essential to both the company and its shareholders.