Credit Insurance and Fraud Prevention: Protecting Your Business from Fraudulent Transactions

Understanding Credit Insurance and Fraud 

Fraud is a persistent threat that impacts businesses of every size and sector. It can cause significant financial loss and reputational damage. From healthcare scams and crowdfunding deceptions to complex business schemes, fraud is constantly evolving. 

One often overlooked tool in fraud prevention? Credit insurance. Credit insurance helps businesses avoid the financial hit from unpaid invoices—especially when the non-payment is the result of fraud. 

Common Types of Business Fraud 

To guard against fraud, you first need to know what you’re up against. Common types of fraud include: 

• Government fraud: Misuse or manipulation of public funds or benefits 
• Insurance fraud: Falsified claims or staged incidents 
• Business fraud: Theft or deception by employees or external actors 
• Online fraud: Fake campaigns, impersonation schemes, and fraudulent vendors 

Scammers are getting smarter, and businesses need tools like trade credit insurance to protect themselves. 

How Credit Insurance Helps Protect Against Fraud

Trade credit insurance doesn’t just cover non-payment by insolvent customers. It can also help flag suspicious transactions and prevent fraud-related losses. 

Here’s how it works: 

• Insurer scrutiny: Insurance providers analyze creditworthiness and alert you to red flags
• Claims safety net: If you do fall victim to a scam, you’re often still covered
• Peace of mind: You can focus on growth without worrying about getting paid

A Real Example: Fraud Nearly Cost One Client Big

A long-time client almost fell victim to a well-crafted scam. Here’s what happened: 

• Initial request: The client applied for credit coverage for a new customer. 
• Red flag: The insurer declined coverage based on recent negative news about the company. 
• Fake documents: Fraudsters shared fake financials for 2023 and 2024. 
• Email impersonation: The emails looked like they came from the company’s CFO—but the domain was subtly wrong. 
• Website spoofing: The scammers built a convincing fake website and submitted a real-looking purchase order—with a shipping address that didn’t match the billing address. 

Without intervention, the client would’ve shipped out product and received no payment. Thanks to credit insurance and due diligence, disaster was avoided. 

Red Flags: How to Spot a Fraudulent Order 

Fraudsters follow predictable patterns. Watch for: 

• Email domain lookalikes (e.g., “compaany.com” instead of “company.com”) 
• Unusual purchase orders that come out of nowhere 
• Shipping/billing mismatches 
• Requests to bypass normal credit checks 

Training your team to spot these red flags—and having credit insurance in place—can make all the difference. 

Stay Vigilant: Fraud Prevention Best Practices 

Fraud prevention isn’t one-and-done. Make it part of your business DNA: 

• Double-check vendor and customer communications 
• Train employees on fraud awareness 
• Use trade credit insurance to protect your receivables from both insolvency and fraud 
• Leverage government resources like ReportFraud.ftc.gov or the SBA’s fraud prevention guide

Conclusion: Credit Insurance Is Your Fraud Defense Tool 

Fraud isn’t going away—but with the right tools, your business doesn’t have to suffer. Credit insurance is more than just protection from unpaid invoices—it’s part of a broader fraud prevention strategy. 

Since 2004, Securitas Global Risk Solutions, LLC (“Securitas”) has helped clients develop credit and political risk transfer solutions that provide value on numerous levels. As an independent trade credit and political risk insurance brokerage, Securitas is focused on developing comprehensive solutions that meet the needs of clients, ensuring a complete understanding of policy wording and delivering excellent responsive service.