Frauds and malpractices are of different types and kinds that make them distinctive from one another. Also, every business industry is captivated by scams that make it an apprehensive space for the customers. Indeed, the e-commerce industry is a widely growing business vertical that has benefitted both the owners and the customers. But, there also lies some risk of fraud regarding payment and data access. It is essential to reduce the risk of such risks and create a safe arena of trading. If you are dealing in the industry, you can use the best e-commerce fraud prevention software that will ensure everything is safe and sound.
What are E-Commerce Frauds?
It is any kind of fraud that happens in an e-commerce platform. The transactions that occur with false identity and fraud advertising of a brand or product can be categorized under e-commerce frauds. When a customer is engaged in fraud, you need to bear all the adverse effects of it. Compared to the brick and mortar frauds, online ones are more fatal and detrimental to the business image. Hence, it is vital to take stringent measures to mitigate it.
Why is E-commerce Fraud Prevention Necessary?
If you are an e-commerce trader or own a store, it is essential to ensure that your customers’ interests are preserved. There are plenty of potential e-commerce frauds that are found in this domain, which can severely impact your goodwill.
Moreover, many frauds happen from the customers‘ side, so you need to be prepared for anything and everything. It has been found in an e-commerce study that scams in this industry are escalating as fast as its sales.
It is essential to deploy a fraud management system that will help in detecting the frauds and manage chargeback disputes before they can hamper your business.
Types of E-commerce Frauds You Need To Be Aware Of
The ideal way to fight all the fraud is to ascertain its different types to remain more vigilant.
Card Testing Fraud
It is a popular method to defame the e-commerce business. Card testing fraud happens when someone gets access to multiple stone credit cards or their numbers through theft or accessing unauthorized data. In order to test the working of these cards, the fraudsters will make a small purchase on the e-commerce sites. Once they work, they will start making expensive purchases.
It is a fraud that occurs from the customer’s side; that’s why it is called friendly fraud. Friendly fraud is when a customer purchases an item and requests for a chargeback by claiming that the transaction was unauthorized. The payment processor has to return the amount that is actually charged from the retailer.
It is one of the commonly seen frauds that is growing every day. The fraudsters will make a purchase using a stolen credit card and later request a refund due to overpayment. When they request a refund, they give another alternative for payment, saying their credit card is closed. This way, the credit card is never refunded, and the retailer has to pay the full amount to the actual owner.
Account Takeover Fraud
You need to create an account for purchasing from an e-commerce store. Just like any other online account, this account can also be hacked. The fraudsters can breach into the account and access all the information regarding order history, payment credentials, personal information, etc. They can make fraud purchases and even withdraw funds.
It is an intricate fraud that needs special attention. Interception fraud happens when the fraudsters make purchases, and the billing or shipping address entered matches the information of a stolen card. After placing the order, their main goal is to get the package. There are different ways of conducting this fraud, like asking the customer support to change the address before shipping it.
It is a combination of three different types of fraud that includes fraudster, customer, and e-commerce store. A fraudster will set up replication of a popular e-commerce store like Amazon, Shopify, eBay, etc. to lure customers with offers. This will drive some legitimate customers to the fraud store. When the customers place orders with their cards, these fraudsters will give the card details and make purchases from the legitimate e-commerce store.
The Bottom Line
E-commerce frauds are increasing at a fast-paced rate creating an alarming situation in the industry. The reason why these malpractices are growing rapidly is due to the absence of a proper prevention method. These frauds have become sophisticated, and fraudsters are leveraging on every advanced technology to heighten their impact. There are different types of frauds involved in the e-commerce industry that need to be looked after. After understanding each fraud type, it is essential to deploy the necessary prevention measures for better risk management.