Every reward has its price. That is what business owners quickly learn once they have their ecommerce set up. The most significant price that online stores pay comes from popular ecommerce fraud tactics that leach off from business profits.
Fraudsters are continually innovating different tactics, and improving existing ones, pushing merchants to keep up with the newest developments in ecommerce fraud trends. It is crucial to realize just what they are up to, to stay a step ahead. Those that do not face potential loss.
What is Ecommerce Fraud
The term fraud in ecommerce, also known as a fraud in transactions, happens when a fraudster contacts a retailer, offers a business deal, and compensates for it using fraudulent means, such as a stolen or fake credit card.
Fraud has been around for ages in one manner or another; however, online fraud is now even more prominent. Ecommerce owners are unwillingly opening their doors to emerging types of fraud every day.
Importance of Ecommerce Fraud Prevention
With ecommerce fraud growing, today's retailers need to follow a systematic solution to stop it. An essential part of this approach is to find and enforce the strategies that will enable them to monitor incoming orders and prevent fraud from ever happening in the first place carefully but efficiently.
Fortunately, the detection of ecommerce fraud is also on the rise, with strategies almost as complex as the fraud they fight. We'll address the top ecommerce fraud trends to beware of this year and in the years to come.
|Identity theft||Chargebacks||Mobile ecommerce fraud||Account takeover fraud||Phishing|
|Fraudsters’ target||Merchants and Consumers||Merchants||Merchants and Consumers||Merchants and Consumers||Merchants and Consumers|
|Fraud mechanism||Technical and Social Engineering||Social Engineering||Technical and Social Engineering||Technical and Social Engineering||Social Engineering|
The concept of identity fraud is the fraudulent usage of personal details or records by another to purchase goods, services, or credit. Identity theft is common in today's world, and there are several reasons why fraudsters would want to steal your identity and get access to your personal information. The most popular identity thefts are:
- Financial – in these situations, the identity thieves attempt to acquire a credit card, loan, or purchase items while pretending to be someone else.
- Medical – this happens when someone uses your identity to fraudulently get access to medical care, prescription medications, or life insurance benefits.
- Criminal — criminal identity fraud typically happens when someone provides incorrect identification to authorities now, and they are prosecuted
- Child — that type of fraud arises where anyone takes or misuses sensitive details of a minor
- ID Cloning — in ID cloning, identity thieves generally attempt to impersonate somebody else so that their real identity is concealed
Fraud might seem scary at first, but it is also avoidable. To prevent attacks, there are a few things you or your customers can do:
- Always check any form you are filling out for PCI Compliance.
- Take good care of your social security number. · Use strong and complicated passwords and pins.
- Consider how much information you are sharing or oversharing.
- Keep an eye out for fishy emails.
- As a business, make sure to use a shredder
- Use two-factor authentications on your mobile devices.
- Check your credit reports frequently.
- Monitor your financial statements
A chargeback happens anytime a cardholder challenges a fee and requests the card-issuing bank to cancel it. The right to appeal a payment shields customer against fraudulent sales, but that may trigger enormous business problems, particularly when given in error.
There are several usual culprits behind these claims. Fortunately, there are mechanisms and procedures that you may set to stop them.
- Fraudulent purchases - if a cardholder receives a charge from your company but has never purchased something from you, that may mean that there is fraud at stake.
- Issues regarding packaging, distribution, or price happens when a cardholder never receives the item they purchased or is overcharged for a product/service.
- Unprocessed credit - in such situations, a cardholder returns a product in anticipation of a refund or account compensation and does not obtain one. The explanation for the return may differ.
- Consumer or service complaint - cardholders can file a dispute if they are unhappy with the goods or services they received.
- Seeing an unrecognizable name on the receipt.
- Recurring payments for subscriptions - can be experienced as a fraud as they might happen when a consumer forgets that they are subscribed to a service and gets charged.
To prevent all the chargeback issues that we named above:
- Follow your payment processor guidelines
- Get everything in writing
- Deal with customer service issues promptly
- Learn to spot warning signs of fraud
- Train employees to recognize fraudulent activities
- Keep good records of transactions
- Fight back when it makes sense.
Mobile Ecommerce Fraud
As the importance of online shopping increases, more of it has moved to smartphones. Smartphone use causes a heightened danger of mobile ecommerce fraud attempts. It is necessary to recognize mobile ecommerce fraud when designing your ecommerce site and to develop tools and programs to detect and prevent it.
Undertaking mobile fraud means first understanding what it is and how it impacts your ecommerce platform:
- Account takeovers - when someone gains access to a customer’s legitimate account for malicious use
- Communication and customer support fraud - when customers call in to access their account, they are asked personal questions to verify their identity. If a malicious person gains access to this information, they can provide it to customer support and gain access to a customer account.
- Subscription fraud - fraudsters open a mobile phone subscription under the victim’s name. They then use the newly established phone account to purchase and subscribe to other services under your customers' names.
- Stolen devices - with the number of apps, accounts, and data we have on or connected to our phones, having physical access to a mobile device gives fraudster access to much of that person's personal information.
Here are some ways to reduce mobile payment fraud:
- Use secure Wi-Fi connections
- Use biometric identification
- Use two or multi-factor authentication
- Detect mobile browser and prevent unprotected browsers
- Follow PCI DSS security standards
- Identify trends and patterns with AI and machine learning
Account Takeover Fraud
Account takeover fraud occurs where a fraudster gets access to an account not belonging to them, alters details such as sign-in credentials or personal information, and eventually makes illegal transactions through that account. It has gone a step further in recent years, as the fraudster is now taking ownership of different accounts, like mobiles, where a one-time code request to modify can be submitted.
How can your business prevent account takeover fraud?
Use integrated, risk-based identity and app authentication as well as tailored, knowledge-based authentication to allow “good” consumers to pass through the phase and frustrates the fraudsters to mitigate the possibility of account takeover fraud.
Reduce manual processes with an end-to-end fraud detection system that reduces the possibility of knowledge silos and enables streamlined processes for the employees. When information is required, support workers with the best available evidence to make choices efficiently and correctly.
Scammers use email or text messages to manipulate you into sending sensitive details to them. They can attempt to steal your passwords, account numbers, or numbers of social security. They could gain access to your computer, bank, or other accounts if they get those details. Every day, scammers conduct thousands of phishing attacks like this, and they are quite useful.
Scammers often update their tactics, but some signs will help you recognize a phishing email or text message.
Phishing emails and text messages may appear to be from a company that you know or trust. They may seem to be from a bank, a credit card service, a website for social networking, an electronic payment website or device, or an online store.
Phishing emails and text messages often try to trick you into clicking on a link or opening an attachment.
So, how can you protect yourself from a Phishing attack?
You may think you are safe with a spam filter in your inbox, but scammers are always trying to outsmart them. Instead, you can also opt to:
- Use common sense and check email sender details, especially if you are asked to do something unusual
- Do not allow yourself to get urged or scared to click on malicious links in phishing emails
- Do not send sensitive business or personal data via email
- Protect your computer by using security and antivirus software
- Protect your mobile phone by setting software to update automatically
- Protect your accounts by using multi-factor authentication
- Protect your data by backing it up
In this new decade, we are expecting to see new trends in fraud, perhaps ones we could have never predicted. For the time being, the ecommerce fraud trends listed above are the ones to look out for if you do not want your business to suffer a loss. It is essential to stay informed and aware. Keep your eye out for new fraud cases, e.g., a Trojan that was released through Gmail just a short while ago. Only by staying aware can you avoid some, if not all, these fraud trends.