E-commerce fraud is an illegal transaction that occurs on an e-commerce platform. This is where another party uses credit information to transact online without the owner’s knowledge. It’s also known as purchase fraud since most of the transactions entail using another person’s credit or debit information.
When running an online store, you should ensure your customer’s data and information and your business is protected against potential fraud. Recently, fraud cases have risen significantly. Therefore, online stores should embrace the use of fraud management systems that detect and protect against fraud while helping you reduce chargebacks and related disputes.
The best way to tackle online fraud is to identify the loophole on your platform. The different types of e-commerce fraud include:
- Card testing fraud:Also known as card cracking. This is when an ill-intended individual gains access to the stolen credit card’s information by finding out its validity with the intent of using it in online purchases. Small businesses are usually the target for they lack the necessary resources to prevent or detect such attacks.
- Friendly fraud:This happens when you purchase an item or service online and later request a chargeback from the issuing bank by claiming the transaction was invalid. It is also known as chargeback fraud. Chargeback services are meant to protect consumers, but others take advantage of this. For instance, an item is purchased from an online store then later claimed it was not delivered, therefore claiming a chargeback.
- Phishing:This involves victim impersonation after the fraudster pretends to be a service provider. They proceed in requesting your personal information or try to get you to install malware, where they proceed to retrieve your data.
- Interception fraud: This occurs when fraudsters place orders on your e-commerce platform using a stolen credit card, filling the billing and shipping address matching the card. Once the order has been placed, they proceed to contact the customer care service representative to change the initial address before it’s shipped.
- Triangulation fraud:This happens when a customer genuinely makes an online purchase from a third-party platform like Amazon, but the item bought has been stolen from another seller’s website or online store. This happens without the customer’s knowledge, and all businesses are at risk.
How can you fight back against e-commerce fraud?
- Take advantage of fraud detection management systems to help you identify red-flag transactions.
- Adhere to your payment card provider’s data security standardsat all times. They set requirements that ensure companies storing and processing credit card information safeguard the data collected.
- When you detect a fraudulent transaction, you can blacklist the customer banning them from future purchases on your website.
- Be sure to create a strong password that’s hard to crack.
- Separate your financial information by using a dedicated working station to avoid the risk of getting unsolicited information.
As e-commerce continuously changes, so does the style of fraud. However, the advancements provided by technology have made fraud detection easy, meaning that your online business will be protected against fraudsters.