Ecommerce fraud is one of the easiest ways to make a living online. Online sales have grown exponentially over the past decade, and have grown significantly since the COVID-19 outbreak left everyone indoors. Unfortunately, the growth of e-commerce has also led to an increase in e-commerce fraud. E-commerce fraud last year exceeded 2020 losses by 14% to more than $ 20 billion.
How to prevent financial problems caused by e-commerce fraud? At the end of this article, you will understand how fraud affects your online business, how to detect it, and what you can do to prevent your e-commerce fraud.
What is e-commerce fraud?
E-commerce or payment fraud occurs when a person attempts to trick an online retailer into stealing money, data or products from the customer. There are various ways fraudsters cheat e-commerce algorithms and trick business owners into sending products for the purpose of using a paid account.
As scammers become more and more vulnerable to customer fraud, e-commerce marketers will develop strategies to combat fraud. This includes detecting users, preventing spam and phishing by using a back-end application, and using comprehensive insurance policy to protect your assets.
Now you know what exactly an ecommerce fraud is. It is time to get aware of the common types of e commerce frauds. When you are aware of these types, it will be easy for you to detect the issue and take wise actions.
Types of E-commerce fraud
Over the years, e-commerce has evolved from using cardholders to full fraudulent activities. Let’s talk about six types of e-commerce scams so that you can effectively plan your e-commerce scams.
Credit card fraud occurs when a person purchases a card that is not his or her own. The digital form of e-commerce is a training ground for CNP fraud. While almost all e-commerce stores require cardholders to verify their CVV code to prove they have the account, scammers know how to obtain such information by using phishing scams and hacker sales.
Refund fraud is when a customer starts a refund after receiving an item to keep their money and products they have received. But reimbursement is not always intentional. Friendly fraud is when a refund occurs suddenly. While the motive is not malicious, friend fraud still accounts for 40% to 80% of e-commerce fraud losses.
Account takeover fraud
ATO fraud occurs when a person logs into a customer’s account and buys the product with that account, using the reward code and so on. Fraudsters often steal customer login credentials through phishing scams, exposing legitimate businesses to gain customer trust and tricking them into disclosing important account information.
Account registration fraud
This type of fraud is similar to ATO fraud, but instead of taking over existing users’ accounts, scammers use full credit card information to open an account at an e-commerce store.
Email blocking scams
When a thief steals a credit card and uses it to deliver the goods to the cardholder’s physical address. But before the package arrives, the scammer will contact the customer service to change the delivery address. This fraudulent process goes beyond the fraudulent detection process and steals from cardholders and online businesses.
Fraudsters in various forms entice customers to provide important financial and personal information. Fraudsters will use fake icons and other symbols to make their fake social media pages or phishing emails look like unscrupulous ones who trust the attackers and fall prey to the scheme.
Detect e-commerce scams
The impact of e-commerce fraud can be huge, so learning how to identify e-commerce scams can help prevent further damage to your online business.
Here are some possible signs of e-commerce fraud:
- When you do not sign in to any new device, you will receive a new login email notification.
- See a unique entry point.
- You notice that users buy a lot of products in one business.
- You will get a lot of orders right away.
- Many orders are transmitted at the same address using different cards (and more).
- You have several customers with a similar email address.
Prevent e-commerce fraud
Once you know the types of frauds that can happen in the ecommerce business, it is now the time to take a serious action. Whether you own a Swiss automatic watch store online or a clothing brand, fraud can happen at any time and place.
There is no effective solution to prevent e-commerce fraud. However, deceptive methods for fraudulent security by using one or all of the following tips can prevent e-commerce fraud:
Integrate multi-factor authentication service
Multiple scans use multiple scaling methods to allow customers to access their account. Despite the controversy involved, MFA’s added security provides additional protection for your e-commerce business as well as your customers’ financial data.
Follow payment card standards
Standard credit card payment or debit card industry helps customers identify weaknesses and prevent credit card fraud by enforcing the best database system and legal requirements for e-commerce business owners.
Lockdown your email security
Since phishing emails account for 91% of all fraudulent attacks, business owners should develop standards to protect their business emails. New email marketing system requires businesses to use digital tools to prevent spam, phishing emails and other fraudulent emails.
Transfer SSL encryption
SSL certificates help protect e-commerce sites by encrypting sensitive data so that it is not hidden from malicious viewers. SSL encryption increases customer confidence in knowing that your e-commerce site is running on a database as well as blocking e-commerce scams.
Fraud monitoring software
If you have an ecommerce business, you will be able to detect suspicious commands to stop fraud. The most competitive online resources provide comprehensive risk analysis including business details, geographical location, device tracking and more.
E-commerce affects thousands of e-commerce transactions every year, leading to cost overruns and financial losses. Protecting your business from e-commerce fraud starts with identifying different types of scams, identifying warning signs and developing strategic plans to prevent future e-commerce scams.