Fraud may seem like something that only hits big companies, but small businesses are increasingly under attack. From chargebacks and fake invoices to bots running stolen card numbers, these threats can damage your finances and your reputation. You do not need a massive budget or in-house team to protect your business – with the right setup and support, staying safe and fast is entirely doable.
At First Horizon, we partner with business owners to build payment systems that are smart, secure, and customer-friendly. In this guide, we’ll share the most common fraud threats today, practical steps to reduce risk, and how to keep your checkout smooth without slowing down sales.
Why payment fraud is growing, and how to prevent it as a small business
Fraud has evolved. These days, it's not just stolen credit cards or data breaches. Fraudsters use account takeovers, social engineering emails, bots testing thousands of card numbers, and even fake refund requests. Small business systems are often easy targets – more customer touchpoints, digital transactions, and fewer internal checks.
AFP, 2025 Payments Fraud and Control Survey – Key Highlights, underwritten by Truist,
https://www.truist.com/content/dam/truist-bank/us/en/documents/info/cci/2025-afp-payments-fraud-control-survey-report-key-highlights.pdf
Autumn Tinnel, First Horizon’s Head of Merchant and Payroll Processing:
“Fraud moves faster than most businesses expect. Most business owners aren’t even aware they are exposed, because just yesterday, they weren’t.”
How First Horizon protects small businesses from payment fraud
Fraud doesn’t always show up the way you expect. Here are two real examples that show how First Horizon partners with businesses to solve problems before they get bigger.
A small online retailer facing card-not-present fraud
A client running an online boutique noticed a suspicious pattern of small, repeated purchases using different cards, often followed by larger, fraudulent orders. Working with their First Horizon banker, they implemented advanced card-not-present verification tools, including Address Verification Service (AVS) and Card Verification Value (CVV) checks. They also set up velocity limits to flag multiple transactions from the same IP address within a short timeframe. This proactive approach significantly reduced fraudulent transactions and protected their revenue, allowing them to focus on growing their legitimate business.
A retail business that uncovered internal theft
At a retail location, long-time employees were quietly stealing funds by issuing debit card credits to themselves. Over 18 months, thousands of dollars were lost. With guidance from First Horizon, the business introduced new oversight processes and system controls to better track employee activity. That shift didn’t just catch the issue, it helped rebuild confidence and prevent future risk.
Fraud prevention tips that won’t disrupt your checkout experience
When it comes to payment fraud prevention, small business owners don’t need to overhaul everything overnight. Start with the following:
- Use tokenization and encryption to protect customer card data.
- Enable two-factor authentication for staff and admin users.
- Create velocity limits or fraud filters to flag risky behaviors.
- Activate AVS and CVV checks to validate cardholder identity.
- Keep your POS and payment software updated regularly.
We work with merchants to activate these features within platforms like Clover, so the protection is built in, not tacked on later.
Self‑assessment checklist: can you answer yes to all these?
How First Horizon’s merchant services help protect your business
You’re not expected to fix this on your own. At First Horizon Bank, we pair technology with service. Our merchants receive:
- A payment setup tailored to your industry and risk profile.
- Help enabling fraud filters, tokenization, and secure login protocols.
- Training and updates so your team stays alert and informed.
- Ongoing visibility through Clover analytics and direct banking support.
We believe protection should build confidence, not anxiety.
FAQs: Small business questions about payment trends
Q: What’s the most frequent type of fraud for small businesses?
Card-not-present fraud (like online orders or recurring billing) and chargeback abuse are most common.
Q: What are some fraud prevention tips for small businesses?
Start with tools like AVS, CVV verification, fraud filters, and tokenization. These are often included in platforms like Clover. First Horizon’s merchant services fraud protection team can help you activate what you need based on your risk profile.
Q: Can I minimize fraud risk without expensive tools?
Look for platforms like Clover that offer starter setups and scale into countertop systems, handhelds, and online gateways. First Horizon bankers can help you map your best path.
Q: What should I do first if I suspect fraud?
Contact your banker immediately. We will connect with your processor and help guide you through next steps.
What smarter fraud prevention means for your small business
Smart fraud prevention does more than protect income. It shows your customers you care about their data and helps build trust that doubles as loyalty. With First Horizon’s expertise, you can feel confident that your payment flow is secure, fast, and flexible.
Want to learn more about how to prevent payment fraud as a small business? A First Horizon banker can assess your setup and recommend smart, seamless ways to protect your customers and your cash flow.
