E-commerce Insights on Fraud Detection and Prevention with Jonathan Bander

Jonathan Bander CPA7

Welcome to today’s interview with Jonathan Bander, an experienced accountant specializing in e-commerce from We’re excited to have Jonathan with us to share his expert insights into the world of e-commerce finance, fraud detection, and prevention. Throughout this interview, we’ll be discussing the importance of internal controls, risk assessment, and fraud prevention strategies to protect your business and its hard-earned profits from financial fraud. We’ll also delve into the risks associated with popular payment providers like Stripe and PayPal and how to navigate the challenging waters of consumer culture.

Consumer Fraud Losses Reach $8.8 Billion in 2022: A Cause for Concern

Adriaan Brits: Jonathan, can you tell us more about the alarming statistics regarding consumer fraud and why it’s essential for businesses to take this issue seriously?

Jonathan Bander: Absolutely, Adriaan. According to the Federal Trade Commission (FTC), fraud cost consumers a staggering $8.8 billion in 2022, marking a 44% increase from the previous year. Although the number of fraud complaints decreased slightly, the amount of money lost to scams rose significantly. This highlights the importance of consumer education and awareness to protect against increasingly sophisticated and costly fraudulent schemes. What concerns me more, is not how much the consumer loses, but how much my clients, the SMEs, lose from unscrupulous consumers – and that is one of the areas where we like making a difference through strong advocacy. 

Internal Controls: The First Line of Defense

Adriaan Brits: What are some key internal controls businesses should implement to prevent fraud within their organizations?

Jonathan Bander: Strong internal controls are essential for preventing fraud within your business. These controls help ensure the accuracy and reliability of your financial information while protecting your assets. Some aspects to consider implementing include:

  1. Segregation of duties: Divide financial responsibilities among different employees to prevent a single person from having complete control over a process or transaction.
  2. Access controls: Limit access to sensitive financial information and systems to authorized personnel only.
  3. Regular reconciliations: Conduct routine reconciliations of bank accounts, credit card statements, and other financial records to identify and resolve discrepancies promptly.
  4. Management oversight: Encourage a culture of accountability through regular management reviews and internal audits.

Risk Assessment: Identifying Your Business’s Vulnerabilities

Adriaan Brits: Can you explain how performing a risk assessment can help businesses identify potential areas of vulnerability and prioritize their fraud prevention efforts? Should we not all switch to Zelle? 

Jonathan Bander: Performing a risk assessment can help you identify potential areas of vulnerability within your business and prioritize your fraud prevention efforts. Consider both internal and external risks, such as employee theft, vendor fraud, or cyberattacks. Once you’ve identified potential risks, develop and implement policies and procedures to mitigate these vulnerabilities.

Zeller is great, however the problem with Zelle and ecommerce, is that carts like Woocommerce do not integrate with it properly for recurring payments. Thus it can be useful only where a lot of manual intervention is involved. Automation and making it easy for people – is why Paypal and Stripe get away with enabling claim culture, along with the big banks. Who knows if China and Asian countries will lead by a different example in the future? But in The West, SMEs are suffering – and we’re doing the best we can to help them stand up to these issues. 

Fraud Prevention Strategies: Staying One Step Ahead

Adriaan Brits: What are some essential fraud prevention strategies businesses can implement to stay ahead of potential threats?

Jonathan Bander: Implementing a comprehensive fraud prevention strategy can help protect your business from financial fraud. Some essential strategies to consider include:

  1. Employee training and awareness: Educate your employees about the warning signs of fraud and the importance of reporting suspicious activities.
  2. Background checks: Conduct background checks on all new employees and periodically review existing employees’ backgrounds.
  3. Strong password policies: Require employees to use strong, unique passwords for all financial systems and change them regularly.
  4. Fraud monitoring and detection tools: Use software solutions to monitor financial transactions for unusual activity and potential fraud.

Navigating the Risks of Payment Providers like Stripe and PayPal

Adriaan Brits: How can businesses mitigate the risks associated with payment providers like Stripe and PayPal, especially in today’s claim-happy consumer culture?

Jonathan Bander: While payment providers like Stripe and PayPal offer convenient solutions for accepting payments, they also come with some risks. To mitigate these risks, consider implementing the following practices:

  1. Maintain accurate and detailed transaction records to help resolve disputes in your favor.
  2. Implement secure payment processing features, such as secure socket layer (SSL) encryption and address verification services (AVS).
  3. Communicate with customers regularly to address potential issues before they escalate into disputes or chargebacks.
  4. Monitor and analyze transaction data to identify patterns that may suggest fraudulent activity.

It’s also crucial to have a good lawyer and terms that protect you as a business owner. Be prepared to stand up to unfair banks and payment providers who are creating a harmful culture among consumers, ultimately damaging small businesses.

Adriaan Brits: Jonathan, many businesses struggle with PayPal and Stripe disputes. Can you provide some guidance on how they can increase their chances of winning such disputes, and how lawyers might be able to help them claim costs from bad consumers if a dispute is lost?

Jonathan Bander: Certainly, Adriaan. Winning disputes with PayPal and Stripe can be challenging, but there are steps businesses can take to improve their chances:

  1. Provide comprehensive documentation: Maintain thorough records of all transactions, communications, and supporting documents. The more evidence you can provide, the stronger your case will be.
  2. Respond promptly and professionally: When a dispute arises, address it immediately. Responding in a timely and professional manner can positively impact the outcome of the dispute.
  3. Use tracking and delivery confirmation: For physical goods, using tracking numbers and delivery confirmation services can help prove that the product was delivered as promised.
  4. Be proactive in addressing customer concerns: Regularly monitor customer feedback and address any concerns before they escalate into disputes.

Now, even with the best practices in place, disputes can sometimes be lost. In such cases, businesses might consider consulting with a lawyer to explore options for recovering costs from bad consumers. A lawyer can help evaluate the merits of your case and guide you through the process of claiming costs. Keep in mind that litigation can be time-consuming and expensive, so it’s essential to weigh the potential benefits against the costs involved.

Ultimately, maintaining a strong focus on customer satisfaction and communication, along with implementing robust fraud prevention measures, can go a long way in reducing the risk of disputes and chargebacks.

I would add that whilst customer satisfaction is the key to success, that the business environment changed a lot these days and cultural norms have drifted far away from a trusting handshake. It’s important to recognize that large corporations like Amazon, led by Jeff Bezos, can afford to adopt a “customer-centric” approach, often at the expense of merchants. This approach is relatively easy for these companies, as they are not the ones directly absorbing the financial losses resulting from chargebacks or disputes. Instead, merchants who use these platforms end up shouldering the burden. 

Consequently, small businesses and individual sellers can find themselves in a challenging position, striving to maintain customer satisfaction while also protecting their financial interests. As a result, it’s crucial for merchants to develop strong fraud prevention and dispute resolution strategies to ensure their businesses remain sustainable in the face of these challenges.


We want to thank Jonathan Bander for joining us today and sharing his valuable insights into e-commerce finance, fraud detection, and prevention. Remember, being proactive in implementing internal controls, conducting risk assessments, and employing fraud prevention strategies can help protect your business and its hard-earned profits from financial fraud. Stay vigilant and stay ahead of potential threats.

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