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 studies about 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. Annual cybercrime costs are predicted to 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 takeovers, to keep 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 essential to combat it effectively. The 6 types of e-Commerce fraud are:
Card Testing Fraud
Also referred to as card cracking, card testing fraud happens when the unauthorized person gains access to stolen credit card credentials by stealing or purchasing card data on the dark web.
The cybercriminal initially makes small test purchases on the e-Commerce website with scripts or bots. This checks whether the credit card can be used to make transactions. If this is successful, the fraudsters start to make expensive purchases. Companies often ignore small purchases and do not realize they are vulnerable to card testing fraud. Only when more significant investments are made do 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 purchases 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 must issue a chargeback to the customer. The retailer is required to pay the price of the item or service. A returns abuse prevention solution can help you manage this.
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 for 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 no longer functional.
Account Takeover Fraud
Account Takeover fraud (ATO) enables fraudsters to steal the authorized credentials of protected user accounts. This exposes the users' sensitive data, 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 placing the order, the fraudster intercepts the package and takes the product for themselves.
Triangulation Fraud
As the name suggests, triangulation fraud mediates between 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. In this case, the prime victims 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 detect 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 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 steps to prevent fraud in their online stores.
