E-Commerce Fraud Is on The Rise
Online merchants must have the ability to rapidly and effectively avoid E-commerce fraud. They will save a ton of time and resources if they do this. Their primary business would ultimately be harmed.
It was reported that online retail sales would surpass $3.5 billion. The good news is that scammers are aware of this, so although it’s a reason to rejoice, it’s also a warning. There is an ever-increasing desire to find a way around the system to take a part of the funds.
Constant innovation is seen in criminals’ methods to defraud the payment system. There isn’t a simple answer for preventing an E-commerce scam that businesses can adopt. The good news is that there are techniques to reduce the likelihood of this occurring.
What is E-Commerce Fraud?
Fraud detection in e-commerce assists online firms in identifying high-risk activities so that they may implement appropriate fraud detection and protection procedures.
It supports these with fraud detection technologies that use algorithm-based methods to assess each transaction’s possible risk. Every month, online businesses face an average of 206,000 assaults on their websites.
The identification of fraudulent activity in online commerce has grown more important in recent years as the prevalence of online shopping scams and the sophistication they are committed to have increased.
As per Juniper Research’s 2021 Online Payment Fraud investigation, ecommerce businesses have lost $20 billion from fraudulent activity in 2021 compared to $17.5 billion in 2020, an 18 percent rise.
Reasons for E-Commerce Activity
The following are some of the most prominent reasons for fraudulent e-commerce activities in today’s world:
🡪 Evasion
The criminals who commit e-commerce fraud know that law enforcement agencies do not prioritize e-commerce crime.
For one reason, the money at stake in every fraud claim is often minimal compared to other forms of criminal activity. It’s harder for other countries to track and prosecute cybercrimes.
🡪 Anonymity
Payment fraud is especially common since it may be done without anybody noticing. Scam artists don’t have to enter a shop, speak to anybody, or risk being caught on store surveillance cameras to perpetrate their crimes.
Cybercriminals often use forged email accounts and postal service boxes to conceal their true identities and perpetrate fraudulent activities.
🡪 Ease
Fraudsters used to take credit cards and use them to make transactions well before the Internet. Fake companies have become a lot simpler to operate in the modern world.
On the dark web, they acquire many seized credit cards since they need them by accessing the website. An estimated 23 million stolen credit cards for traded on the dark net in the first half of 2019.
10 Effective Methods to Ensure Your E-Commerce Business is Fraud-Free
Take a look at these ten effective methods that can help your e-commerce achieve that fraud-free status:
✔ Method 1: Ensure PCI-Compliant E-Commerce Business
The PCI Security Guidelines Council (PCI SSC) introduced PCI DSS payment security requirements to combat the rise in data theft in 2006. The group included Visa, MasterCard, American Express, and the Japanese Credit Bureau.
Merchants must collect, handle, and send credit card details securely to reduce the risk of fraud and data breaches and protect customers’ personal information.
For this reason, an online shop that takes credit card payments must be PCI-compliant to prevent sensitive cardholder data from being disclosed due to credit card fraud. For SaaS-based online stores, this adherence is often built-in. Looking to detect frauds in your e-commerce, read this!
✔ Method 2: Establish Clear Anti-Fraud Policies
How is data protected? Workers must know what to do if they suspect fraud. Protecting oneself against chargeback theft can get tricky.
Using tracking numbers is the most effective method of guarding against chargeback fraud. Having this information will allow you to call the customer’s bank if they attempt to claim that a transaction was illicit.
E-commerce appears to be particularly sensitive to fraud, a problem in any business. You must be aware of the many types of fraud you may face. You and your company can only be safeguarded in this manner.
✔ Method 3: Monitor Your International Sales
If you’re processing international shipments, you’ll want to pay extra attention to them. For mid-to-large-sized merchants in Canada, most of their fraud losses come from foreign transactions, particularly those made through mobile commerce.
Monitor the number of visitors and use local security measures. Use these measures to protect domestic transactions as well. Suspected fraud might well be considered when a high number of transactions are made from an overseas location. Yet, there are just a few website visits from the same region simultaneously.
✔ Method 4: Implement AI and Machine Learning
You should not just depend on human judgment to identify and prevent online fraud. Rather than relying on the human mistake, artificial intelligence (AI) fraud protection systems do the job of skilled fraud analysts.
It assesses the customer’s worth against the risk of default on a quicker and more flexible footing than a person can. E-commerce enterprises use Artificial Intelligence (AI) to do more than only identify and prevent fraud.
They approve increasingly good orders, minimize the number of manual inspections, and have better control over the business results of their firm.
✔ Method 5: Train Your Customer Support E-Commerce Fraud Prevention
Ecommerce fraud prevention relies heavily on customer care provided by e-commerce companies. With its help, you can prevent your company from being victimized by ecommerce scams throughout the busiest shopping season.
Fraudsters may be able to get through your security measures if your customer service staff hurries through purchase approvals. Educate your customer support reps on how to spot signs of fraudulent activity.
Fraudsters prey on front-line customer care agents, who are often undertrained in detecting and preventing fraud. Increase your customer service staff at the busiest time of the year.
The level of pleasure your customers feel with your customer service is closely linked to the pace during which you answer their questions. To keep your customers pleased, you must address their complaints as quickly as possible.
If your present workforce can maintain this level of performance, you needn’t worry; if not, you’ll need to teach them or bring in new employees.
✔ Method 6: Use an Address Verification Service (AVS)
It is common for credit card processing companies and institutions to provide an Address Verification Service, which validates the invoicing address given by the credit user (the customer) with that on record with their financial institution to identify suspect credit card transactions in real-time.
The merchant asks the payment processor to authorize the credit card transaction, and this check is part of that request. The system either rejects the transaction or flags it for further inquiry if the addresses don’t match.
✔ Method 7: Use Tracking Numbers for All Orders
Chargeback fraud may be minimized with the use of transaction tracking numbers. Friendly fraud, sometimes known as chargeback fraud, occurs when an issuing bank forces a client to seek a refund from a merchant.
Regardless of the precautions used to authenticate the transaction, a merchant is held responsible if this occurs. In addition, retailers are often still responsible for all transaction costs, including those related to the withdrawal of illicit monies from their bank accounts.
Fraudulent claims that a product was never delivered are one method consumers commit chargeback fraud. Tracking numbers prove that a product has been delivered to a customer’s doorstep.
Another technique to avoid chargeback fraud is to require the recipient’s signature upon product delivery.
✔ Method 8: Monitor Website for Suspicious Activity
Fraudulent transactions may be avoided if online merchants keep an eye on their businesses and report any unusual behavior to the authorities.
Red flags, such as contradictory billing and delivery information and the actual location of the consumer, may be found by keeping an eye on accounts and transactions.
Customers’ IP addresses are also tracked by software programs that inform merchants if they come from nations known to have many scammers.
As a result, continuous monitoring of a company’s website may assist in identifying unusual behavior that might lead to larger-scale scams in the future.
✔ Method 9: Implement Risk-Based or Step-Up Authentication
If you require your customers to use strong passwords on their accounts, you may help prevent fraud. Customers’ accounts are more difficult to compromise if their passwords are strong enough.
However, no one can be completely protected. With RBA or step-up authentication, issuing banks scrutinize authentication procedures at different degrees of scrutiny according to the risk level of the contact.
There is a correlation between the level of danger and the level of authentication. Authentication encounters with a greater risk of fraud should be stepped up.
[BONUS METHOD]: Employ DataDome for Your E-Commerce Safety!
DataDome can help prevent e-commerce fraud. More than 40% of bot traffic is sent to mobile apps. To defend your organization against online fraud and bot attacks, a uniform degree of security must be applied to all endpoints of your network architecture.
Your mobile app, website, and APIs should be protected with the same degree of security. Every day, DataDome handles 1 trillion data signals from both the client and server sides.
Artificial intelligence (AI) and machine learning models assess each request to your mobile applications, websites, and APIs to decide whether or not access should be given in less than two milliseconds.
As of now, DataDome’s false positive rate is below 0.01%. You can see it in real-time on your dashboard for all your applications, websites, and APIs.
A specific response approach and blocking/challenging methods were designed for each endpoint. To ensure that your company is safe and that your (legitimate) customers get the best possible service, utilize DataDome.
The Takeaway!
There is little doubt that fraudsters are becoming more adept at attacks on internet companies. As the prevalence of e-commerce rises, so does the number of assaults against online shops. Online retailers are also growing better at detecting and deterring online criminals.
Your online shop may be protected against scams if you better understand what ecommerce theft is and why it is so widespread.
