Are you someone who is interested in setting up a store online? Well, you should know by now that there are many types of eCommerce frauds. It’s important to safeguard yourself as much as possible from them as these can be very expensive and damaging for any business.
In the early days of the Internet, customers didn’t have too many choices, but now they have many places where they can find the items they are looking for. So, if you are not offering what your customers want, there is a big chance that they will go buy from someone else.
Therefore, it’s necessary to understand the main types of eCommerce frauds and how to avoid them in order to run a trustworthy business.
7 popular types of eCommerce frauds
1. Identity theft/fraud
This is one of the most common types of eCommerce frauds. Even if you don’t shop online, there’s a chance that your information was misused at some point in time for this type of crime. The risk comes from all different angles, including buying online, using apps, and even simply browsing the Internet. Hackers take advantage of people’s information to steal their credit card numbers or a lot more.
2. Classic fraud
This is one of the most common types of eCommerce frauds. If you are running or want to run an online store, there’s a good chance that you will be the victim of this type of fraud. Fraudsters usually use stolen credit cards, which they can easily buy on black markets around the world. Once they get your information, they will buy your products and not pay for them.
The scariest thing here is that sometimes they can buy goods, but after a few days the charges are dropped by the bank without you knowing anything about it.
3. Friendly/chargeback fraud
This is another common type of eCommerce fraud. Customers who fall into this category are usually people who have problems with what they received from you and want to get a refund. Instead of contacting you about their problem, they will go to their bank or credit card company without your knowledge. It’s especially dangerous because the money that comes back might not be the same amount that you have spent to provide them with the services or products they have received.
4. Card testing fraud
Card testing fraud is also among the common types of eCommerce fraud. Fraudsters usually use stolen credit cards to test if they are working or not. They will try the card only once so that you don’t see it in your reports. If there’s no problem, they will repeat this action with different cards until something goes wrong. Then, when a customer contacts you about some fraudulent activity on their card, it might be too late because the fraudster has already managed to get a lot of information from it.
Also Read: E-commerce – Your Best Internet Weapon
5. Triangulation fraud
In order to get more information about this type of eCommerce fraud, you need to know what triangulation is. In simple words, it’s when two different credit cards are used on the same website at the same time by different people who live far from each other. This means that someone stole their cards and tried to use them on the same website on the same day.
If you have triangulation fraud on your online store, it means that someone stole the card information of people who live far from each other and they are using them to try to get their money back.
6. Account takeovers
Account takeover fraud is also common. The criminals do it by hacking into the e-mail accounts of your customers and changing their passwords, contact information, etc. Once they have taken over an account, they will try to use it to buy from you or even worse – send phishing emails to all of your customers in order to get more information about them.
7. Interception fraud
Interception fraud occurs when a criminal intercepts a package of a customer who has an online store and changes the address so that the customer receives nothing. Then, they contact you asking where their purchased products are. Since they have already changed the address, it’s impossible to find out who intercepted them without tracking numbers from those products.
Now that you know the 7 popular types of eCommerce fraud, you need to learn how to prevent them.
Effective ways to fight eCommerce frauds
1. Get yourself an SSL security certificate
Using HTTPS with your website is the simplest way to stop hackers trying to steal your customer’s information. You just need to implement this into your website development service and it will encrypt all of the sensitive data you send out, making it unreadable for anyone except for the person to whom you sent them to.
2. Use 2-factor authentication
In order to protect your customers from hackers, you need to use a method called 2-factor authentication. It makes logging into an account more difficult because it requires the user to have both passwords and something that only they know. This way even if a hacker gets their hands on password information, they will not be able to log into the account.
3. Don’t allow guest checkout on your website
Guest checkout is a method that allows people to buy from you without having an account with you and thus makes it easier for hackers to get their hands on sensitive information such as credit card numbers, email addresses, etc.
4. Use security alerts
These alerts are the best way to stay updated about any suspicious activity on your account. You will receive them every time something strange happens so that you can prevent frauds before they occur.
5. Stay updated about the latest frauds
The biggest mistake that small online merchants make is thinking that the security alert service is enough to fight eCommerce fraud. Actually, it’s just a part of what you need, and looking for information and staying up-to-date about the latest security threats helps even more in stopping hackers. You can find all of the information you need on security forums, news websites, etc.
As you can see, eCommerce fraud is something to consider when doing business online. There are ways to prevent it though and the main one is trying to stop hackers trying to access sensitive information about your customers. The more experienced you get in this type of security, the easier it will be for you to protect your customers and yourself.