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Retailers are pretty aware of online thefts. Although e-commerce stores don’t work similarly to physical stores, e-commerce frauds still target online stores. Due to continuously increasing e-commerce fraud, it has become vital to learn how to spot and prevent e-commerce fraud effectively.
Therefore, here in this guide, we have brought up 6 different ways to prevent e-commerce fraud and ensure to stay safe online.
So, here we go:
E-commerce fraud is an online fraud type that usually occurs on e-commerce platforms. E-commerce fraud has different types. These types usually include:
Using a false identity
Purchasing with fake or stolen credit cards
Affiliate fraud advertising, and more.
Whenever some involved in fraudulent activity on your e-commerce store, you, as a merchant, have to bear its loss. This, consequently, will harm your overall revenue.
Unlike frauds in physical stores, e-commerce frauds usually occur with the wrong credit card or personal information. This is truer when the credit card doesn’t need to be available to make an online purchase.
In some scenarios, hackers hack and publish personal information on the black market. Such kind of e-commerce fraud is usually severe. However, there also exist some other types of fraud. These are usually called friendly e-commerce fraud. In this type of e-commerce fraud, a customer intentionally files for a chargeback to get a free product or avoid any payment.
As e-commerce fraud prosecutions are rare, therefore, these are so prevalent at present. This is truer for multiple reasons, including:
Time required to identify and prove e-commerce fraud
Resources constraints
Hardships of collecting evidence, etc.
So, it is always best to learn how to spot fraud quickly and the best ways to prevent it.
E-commerce fraud can take different forms. These include account takeover, card testing, friendly fraud, and many others.
About $ 20 billion has been reported in e-commerce losses in 2021 only due to online payment fraud in the United States.
Moreover, Asian-Pacific countries are also more vulnerable to e-commerce fraud. The lost revenue in the region is about 4% of the overall turnover of the brand.
This never means that other regions are safe from e-commerce fraud. So, it is high time to see how to effectively spot e-commerce fraud here:
E-commerce frauds usually place high-ticket orders, as the money they spend isn't theirs.
Fraudulent people usually place low-value orders to test their stolen cards. So, you just need to be aware of these.
If a customer purchases different items with different credit cards, this is a clear warning sign for you.
When someone makes a purchase using a stolen card, the person won’t be able to provide enough information. This will cause declined payment. So, if there are repeated declined payments from a customer, this is a red flag.
This is another clear danger sign to look for if you are receiving multiple orders from a suspicious IP location. For example, if your store is USA-based, but you are continuously getting high-ticket items ordered from an Indonesian IP address, this can be a fraud.
E-commerce fraud prevention has become a necessity. Enterprises spend about 10% of their revenues on e-commerce fraud detection and prevention. If you want to keep yourself safe from e-commerce fraud, you must know the best ways to prevent e-commerce fraud.
So, here we go:
Although e-commerce software can flag a risky order. However, you can raise a red flag by manually reviewing risky orders. If you aren’t sure about the legitimacy of an order, you can cross-check by contacting the customer. You can check IP address, location, order quantity, and other factors to see if an order is fraudulent.
E-commerce stores need to find faults in their security frameworks. You should do this before a fraudster or criminal. You can do this by frequently auditing your site security. More frequent site security audits usually to ensure the following:
Updated plugins and shopping cart software
Validated SSL certificate
Backup frequency
PCI-DSS-compliance
Malware protection, and more.
If someone is placing a high-ticket order or higher quantities of order, this is a clear red flag for you. This means a scammer is utilizing someone else’s credit card to make purchases from your e-commerce store.
You must limit this from happening at your e-commerce store by adding a limit on your order quantities.
You should analyze your prior business sales to ensure a normal order quantity limit for your store. This limit should be according to the average number of items your store sells regularly.
All e-commerce businesses have to be PCI compliant to ensure safe payment processing online. This compliance ensures the protection of the sensitive information of cardholders from getting leaked because of any credit card fraud.
If you are utilizing a SaaS e-commerce platform, such platforms provide this compliance by default.
Return frauds are one of the most common forms of e-commerce frauds' forms. This happens when a customer claim that he hasn’t received his order. You can combat this problem by collecting delivery proof. Consequently, customers will claim this when they haven't received the delivery.
For this, you must partner with reliable shipping carriers that can provide you a quick proof of delivery.
A single person can commit different e-commerce frauds to form using the same computer. IP fraud scoring tools can be an efficient solution to detect these people. These tools are efficient and can help you quickly detect an IP address linked to any past e-commerce fraud.
These tools use different signals such as location, VPN status, type of ISP, etc. Consequently, you can learn about IPs with high fraud scores.
E-commerce frauds are complex. People attempting these acts are intelligent and always think outside of the box. However, adopting a preventive strategy can help you to stay safe against these.
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