eCommerce is an extensive industry that collects billions of dollars every year. The lucrative nature of this industry makes it vulnerable to cybercrimes. And over the past few years, this industry has witnessed a lot of fraudulent transactions, impacting the integrity and market value of the merchants.
More than 50% of online consumers have reported that they have experienced some kind of fraudulent activity. This article is a comprehensive guide that will help you understand eCommerce fraud.
What is E-Commerce Fraud?
E-commerce fraud occurs when a fraudster makes unauthorized transactions by stealing credit card information or any such method. These scammers leave merchants without making legal payment for the goods, so the stores have to charge the money from the compromised customers. These frauds differ from eCommerce fraud, as there is no physical card present.
What are the Types of E-Commerce Frauds?
There are a plethora of ways that criminals use to get access to your accounts. However, there are some common types of eCommerce frauds that we have mentioned below:
This type of scam involves an eCommerce business, a fraudster, and a legitimate customer. The criminal set up an online store that sells a popular product at extremely low prices. Once, the fraudster receives the card details from the customers, he or she purchases goods from the legitimate shop to deliver them to the customers.
This is a standard fraud that focuses on stealing or buying credit card details from the victim on the Dark Web. When a fraudster makes an unverified purchase, legitimate customers can dispute the transaction. Subsequently, the bank closes the account and issues a new card number and sends a new credit card to the fraudster.
Card Validity Testing Fraud
In this type of fraud, criminals test various card details to determine whether or not the credentials are valid and then use the same to make unauthorized purchases.
In this, the fraudsters generate an order where billing and shipping address aligns with the one on the card. They try to intercept the purchase by either asking the customer support to change the order address prior to shipping or requesting the shipper to change the order to the place they can collect.
Customers place an order online but then request for a chargeback as their card was stolen. They ask for the same once the product has been delivered. This is a type of fraud that comes directly from the customers instead of skilled fraudsters.
Effective Practices to Control the eCommerce Fraud
Along with using the best eCommerce fraud prevention software, the following are some effective practices that merchants should imbibe:
Some hacker programs can be leveraged to try tons of combinations of a password. And if your password is straightforward and small without any special sign or letters, it will be easier for them to crack. So a simple yet effective practice is to create an alpha-numeric password with more than eight digital. Your password should contain one special character, one capital letter, and numeric digit. While it may be annoying for the customers, they will be safer in the long run.
Mandate Card Verification Value
Every credit card comes with the three-digit security number that is marked on the backside. PCI’s recommends that merchants should not store this number with other credit card information. Fraudsters cannot access this code unless they have it physically. So there is no point for them to store the credit card.
Leveraging the Address Verification System
In AVS, the numeric information on the billing address is saved in a credit card that is aligned with the address on the file of the issuer of the card. This method is primarily used in payment processing. Integrating payment processors with AVS will allow you to offer better security to the target users.
Compliance with PCI Standards
The Payment Card Industry Security Standard Council or PCI, along with the international brand that includes MasterCard and Visa, developed certain rules. These precautionary measures aimed at protecting companies on the internet and protecting the data of the customers.
Update the Software and Platform Timely
Ensure that your operating system is of the latest version. This is to ensure that the OS automatically updates the software with the latest security patches to ascertain that you are protected from new malware and vulnerabilities. Moreover, advanced anti-malware and anti-spyware should be updated on a regular basis to protect the business from new and more sophisticated ways of cyberattacks.
Over the last couple of years, cyber attacks have been on the rise. And the eCommerce industry is among the primary targets due to the massive revenue it generates. It has become imperative for eCommerce companies to implement strong security measures to safeguard themselves and their customers. They need to amalgamate the best eCommerce fraud prevention software with advance methodologies to mitigate the risk of a cyber