E-commerce Fraud
The exponential rise of the e-Commerce industry is associated with the rapid growth of urbanization. The Digital boom has changed the trends according to which one works, socializes, shops, and uses technology. The shifting trends aim to add comfort and convenience to the lives of humans.

E-Commerce sales are booming as more people are purchasing goods and services online. According to the studies about the sales in e-businesses, in 2021, 2.1 billion shoppers are expected to order online. The shoppers will contribute to an incredible boom in e-commerce, growing from $3.5 trillion in 2019 to $6.5 trillion in 2023.

However, the growth of the e-Commerce business has also marked a sharp increase in the rise of online fraud. The debilitating fraud attempts carried out by cybercriminals are becoming quite frequent. This is draining the revenue of many organizations. It is predicted that annual cybercrime costs will increase from $3 trillion in 2015 to $6 trillion annually by 2021. E-Commerce fraud prevention company aims to provide solutions to prevent or manage fraud, like friendly frauds, clean frauds, and account takeover to keep the cyberattacks under control.

This article lists the top 6 types of e-Commerce fraud and the measures to prevent them.

Types of e-Commerce Fraud?

Identification of the fraud type is important to combat it effectively. The 6 types of e-Commerce frauds are:

Card Testing Fraud

Also referred to as card cracking, card testing fraud happens when the unauthorized person gains access to a stolen credit card credentials by theft or through the purchase of card data on the dark web.

The cybercriminal initially makes small test purchases on the e-Commerce website, with scripts or bots. This is to check whether the credit card can be used to make transactions. If this is successful, the fraudsters start to make expensive purchases. The small purchases are often ignored by the companies, and they do not realize that they are vulnerable to card testing fraud. Only when larger purchases are made, they become aware of it.

Friendly Fraud

It is also known as chargeback fraud. Cardholders file false chargebacks using excuses that sound legitimate. So, the consumer who makes a purchase seeks to keep the item or service and then requests a chargeback from the payment processor based on false claims. They claim that the transaction was invalid, and the credit card company is required to issue a chargeback to the customer. The retailer is required to pay the price of the item or service.

Refund Fraud

In this fraud type, a fraudster uses a stolen credit card to make a purchase online. He then contacts the e-Commerce business to issue a reimbursement because of an accidental overpayment. The fraudster then requests them to refund the excess amount and asks the service agent to send this money via an alternative method as their previous credit card is not functional anymore.

Account Takeover Fraud

Account Takeover fraud (ATO) enables the fraudsters to steal the authorized credentials of protected user accounts. This exposes the sensitive data of the users, and these cybercriminals can use this data to manipulate the user.

Interception Fraud

Interception fraud happens when criminals place orders on your eCommerce website where the billing and shipping address match the data linked to the authorized stolen credit card. After the order is placed, the fraudster intercepts the package and takes the product for themselves.

Triangulation Fraud

As the name suggests, triangulation fraud mediates between three points: the fraudster, a shopper, and an e-Commerce store. The criminal will set up a storefront that sells the goods in demand at a competitive price. This attracts several customers who wish to purchase this high-demand product at a bargain price. The customers place the order on the website of the fraudster. The fraudster then uses the stolen credit card numbers to purchase the legitimate product from the e-Commerce website. This product is then sent to the customers. The prime victims, in this case, are those whose credit cards are stolen, and secondly, the eCommerce website also suffers.

How to Prevent E-Commerce Fraud

  • Conduct regular site security audits to discover the flaws in your security.
  • You need to ensure that your store is PCI compliant.
  • You should actively monitor your site to identify suspicious activity.
  • Use an Address Verification Service (AVS) to identify any suspicious credit card transactions in real-time. This helps to prevent credit card fraud.
  • Avoid collecting too much sensitive customer data so that if a data breach occurs, it will cause minimal casualties.
  • Set limits on purchases to reduce your exposure to fraud
  • Integrate an anti-fraud solution into your business for improved fraud management.
  • Ensure that the IP address and credit card address are the same.
  • Avoid non-physical shipping addresses.

To Conclude

Fraudsters these days are using sophisticated and technologically advanced methods to defraud e-Commerce businesses. To detect and deter cyber criminals, e-commerce merchants need to identify the fraud type and implement the necessary steps to prevent fraud on their online store.