Ecommerce Fraud: Top 11 Fraud Prevention Strategies For Ecommerce
Whether you’re an established ecommerce merchant or just planning to start your online business from scratch, we have good news for you. Online sales are predicted to grow by a whopping $6.542 trillion by 2023. But it is not all good news. The growth in ecommerce sales will be matched by growth in online payment frauds. In all honesty, it is not surprising at all. After all, where there is money involved, there will be scammers and cheaters observing you. According to recent statistics, ecommerce business owners currently have to deal with more than 200k fraudulent attacks on their websites each month. As more and more people enter the digital landscape to start their business, criminals will enjoy better opportunities to scam online businesses. The issue is fighting against such planned tactics demands a comprehensive fraud prevention strategy that can protect your online business from potential fraud attacks and scams. Remember, ecommerce fraud prevention best practices not only protect your business against potential financial losses, but it also saves your reputation, secures your business profile, and builds trust. In this post, we’re going to highlight some useful ecommerce fraud prevention tactics that you can implement to protect your online business in 2021 and beyond. What Is Ecommerce Fraud?
Before you can protect your online business from potential ecommerce frauds, it is crucial to know what they are and how scammers manipulate your data and information to perform illegal transactions. Simply put, ecommerce fraud is an “illegal transaction” performed by an attacker on an online platform by using stolen information or data. These frauds are also called ‘purchase’ or ‘payment’ frauds. There are so many ways an attacker can use stolen data to scam ecommerce businesses. Some of them include stolen credit cards, fake identity, etc. Why Does Ecommerce Fraud Take Place? The popularity of ecommerce businesses is the biggest reason why scammers are interested in performing payment frauds. Research suggests that the number of ecommerce frauds has increased twice the rate of ecommerce sales in recent years. Here are some of the reasons why ecommerce frauds take place so frequently in a digital landscape. It’sEasy Unlike in the past, when fraudsters have to steal credit cards by robbing people on the roads, scammers today can easily steal information without risking their life. All they need to do is visit a website on the deep web and purchase as many stolen credit cards as they need. HardForTheAuthoritiesToLocate Although ecommerce is ruling the business world, the police department doesn’t take online fraud seriously. There are several reasons for this. First, online scams do not involve a lot of money. Plus, these frauds are conducted across the borders, making it hard for law enforcement departments to identify, locate, and arrest scammers in other countries. TheFactorOfAnonymity
Another reason why ecommerce frauds are common these days is that they are conducted unseen. The invaders don’t have to visit a store. Also, there is no risk of getting caught on CCTV cameras. They can scam an online business with their basic desktop system and an active internet connection. They don’t have to carry forward a payment fraud from any specific location either. Types Of Ecommerce Frauds Ecommerce fraudsters may use countless tactics to get to customer’s accounts and satisfy their evil intentions. While it is not possible to specify the exact number of methods, you can still keep an eye on some of the most common types of frauds to keep your online business safe from intruders. CreditCardFraud Credit card fraud is one of the most common ecommerce fraud types that is done using a credit or debit card. This type of fraud is also called card-not-present fraud. Fraudsters gather data from stolen credit cards and use that information to make purchases from e-stores. ChargebackFraud Chargeback fraud is also known as friendly fraud. In this type of fraud, a customer/fraudster purchases from a website and asks for a refund by filing a false complaint stating he hasn’t received a product, or the payment has been made twice. InterceptionFraud Interception fraud is something in which a scammer makes a purchase from a website using a stolen credit card, enters the same address as mentioned on the card at checkout, but then calls a customer service and asks to change the shipping location to get products delivered to the desired(wrong) address. TriangulationFraud Triangulation fraud is a 3-step fraud process in which a scammer first creates a fake online store and displays branded products at a bargain price. The idea is to collect customer’s credit card information that they can further use to scam the user. Once they gather information and enough credit card data, they purchase the same product from the real store and get it delivered to the customer. They use the same credit card information to buy other things online and get them shipped to their address. AccountTakeover Most online stores ask their buyers to create an account before they purchase anything from their shop. That form usually includes the buyer’s personal information and contact details. Scammers hack those accounts, log in from their location, and make unauthorized purchases. AffiliateFrauds Affiliate frauds are committed by scammers to earn affiliate commissions. You must be familiar with this concept if you’re using affiliates to market your products online. Affiliate marketers work for different brands in exchange for affiliate commission.
Online sellers provide their affiliates with a unique link that directs customers to the seller’s online store. When a buyer clicks those links and buys a product, the seller rewards the affiliate by giving the percentage of the sale price. What fraudsters do is trick the system and scam a seller by either generating false commissions or increasing the price of the existing commission value. How To Prevent Ecommerce Frauds? Now that you have already learned about different types of ecommerce frauds, it’s time to talk about the best ecommerce fraud prevention strategies that you can follow to protect your business against cybercriminals and scammers. Top 11 Fraud Prevention Strategies For Ecommerce 1.ConductRoutineSecurityAudits Before hackers and scammers identify glitches in your site security system, make sure you detect them on your own. For this, you have to conduct regular site security audits to check if your cart software is up-to-date or you have an updated SSL certificate installed for your website. In addition to that, you should also check your PCI compliance status. Make sure your passwords are tricky enough to dodge scammers. Install paid anti-malware software and ensure you’re using its current version. Don’t forget to remove all inactive plugins and apps that you’re not currently using for your business. 2.TrainYourCustomerServiceToWatchOutForFraudulentActivities Your customer support team plays a pivotal role in protecting your site against phishing schemes and other fraudulent activities. Introduce fraud awareness sessions and specialized training programs for your employees that can help them detect any suspicious activity that can hurt your business. Many times hackers and fraudsters only attack websites that have weak and incompetent customer service. So train your live support team to watch for fraud indicators before they become trouble for you. 3.PayAttentionToPCI-Compliance You have to be PCI-compliant if you accept credit card payments from your customers. PCI Security Standards Council develops and manages PCI standards to ensure the smooth processing of credit card transactions in the ecommerce world. Ecommerce stores built on SaaS-based platforms are already PCI-compliant. But, if you’re using any other platform, make sure you check your compliance status before collecting credit card payments from your customers. 4.UseAVSAndCVV Credit card processors usually provide an AVS (Address Verification Service) to detect suspicious credit card transactions. Similarly, there is a unique CVV code on the back of the debit and credit cards that you can ask your purchasers to provide at the time of payment to verify that the card actually belongs to the customer.
5.UseHTTPS Instead of using HTTP, use HTTPS, which is a secured version of HTTP. When there is a data transfer between your customer’s browser and your ecommerce store, HTTPS will encrypt data to secure buyer’s personal information, including their name, address, credit card info, and more. 6.AvoidCollectingConfidentialCustomerData Collect as little customer information as possible so that you don’t have to think a lot about your site’s security protocols. Cybercriminals can’t steal something that is not available in the first place. Stick to the basics and only gather the details that you need to complete a transaction. 7.AvoidShippingToVirtualAddresses Cybercriminals and hackers use virtual addresses and PO boxes to avoid detection. You can easily prevent this type of fraud by identifying addresses that belong to freight forwarders instead of customers. 8.CreatePersonalizedPolicies
The biggest mistake online merchants make is they copy/paste their return & refund policy, privacy policy, and terms & conditions from other websites. Yes, you may have to invest extra bucks to get them done by a lawyer or a professional, but it’s worth it. Take your time, discuss your needs with your lawyer, and then get your policies done by a pro who can clearly specify each clause to help you avoid future hurdles. 9.RegularlyMonitorYourSiteForSuspiciousActivity Just like physical stores that hire services of prevention officers to identify shoplifters and thieves, you can also keep an eye on your site for suspicious activities.
The good news is you don’t have to do this task manually. As mentioned above, there are many fraud detection and prevention programs that you can choose to fit your needs. Analyze your accounts and track each transaction separately for red flags. 10.InvestInFraudDetectionAndPreventionsTools Fortunately, there are many fraud detection and prevention tools available online that you can use to protect your online store against any possible data theft or attack. Some tools are designed to perform a specific task. These tools are called rudimentary tools. Many ecommerce platforms have built-in rudimentary tools to detect any suspicious payment activity using machine learning algorithms. Mid-level tools are also available. They offer a wide range of functions, including chargeback guarantees, account takeover security, etc. You can also invest in top-level anti-fraud solutions if your budget allows. These tools include everything you need to protect your store against hackers and attackers. 11.MakeSureTheIPAddressAndCreditCardAddressAreTheSame You must know the fact that each order you receive on your website comes from a unique IP address. By looking at an IP address, you can identify the location where the customer is making a purchase. It’s a red flag if you spot that the IP address and the credit card details of the same order do not match. Wrapping Up There is no denying the fact that hackers and cybercriminals are becoming smarter and sophisticated in how they attack online businesses. But if you follow the strategies we have discussed above, you can protect your online store from such crooks. Here, the key is to identify different types of frauds so that you can prepare an all-inclusive strategy to deal with them effectively.