Best Ecommerce Fraud Solutions to Look for in 2022 – E-commerce fraud has been going on for quite a long time but has become especially prevalent in the modern generation, where most of our transactions are being done online. The problem is, no matter how advanced technology gets, fraudsters always have a way to keep up with them. This is why despite the number of fraud cases committed over time, business owners continue to get victimised. In this article, we’ll provide you with solutions on how you can combat e-commerce fraud and protect your business.
What is Ecommerce Fraud?
Basically, e-commerce fraud is an illegal online transaction. Fraudsters do this by purchasing something online and paying it with a fake or stolen card. This results in businesses losing a significant amount of inventory, especially if the fraudster purchased a lot. Business owners end up suffering because chasing an online thief seems impossible, unlike thieves that you can track when caught stealing.
According to a report by Statista, the amount e-commerce businesses lose to online payment fraud is expected to accumulate to 20 billion US dollars in 2021, which is 14 percent more than the recorded amount in the previous year. This is why online business owners need to have knowledge of the forms of e-commerce fraud and how they can prevent it.
Forms of Ecommerce Fraud
In order to spot a fraudster, you should be aware of the forms of fraud that they commit. The most common forms of e-commerce fraud that they commit are:
1. Friendly Fraud
Also referred to as cashback fraud, it happens when a customer reaches out to the seller to complain about the product or services received and demands a refund or cashback. But the truth is, most complaints are fake, and customers use this tactic to get their money back while being able to keep the product.
2. Card Cracking
According to a report by Radial’s eCommerce Fraud Technology Lab, the use of this tactic increased up to 200 percent in the first quarter of 2017 compared to the same period last year.
Fraudsters do this by stealing access to a card and making small and low-value purchases to validate it. Once they find a series of card numbers that work, they will use it to make big purchases. Most business owners don’t spot this kind of fraudulent activity because of the relatively small test purchases. They only notice when big purchases have already been made through the stolen card.
3. Account Takeover/Phishing Fraud
This kind of fraud occurs when a fraudster gains complete access to a business owner’s e-commerce website. Through this, fraudsters can change the website’s details, withdraw all its funds, or use the owner’s information to request customers’ personal data.
4. Shipping Fraud
When making purchases, the fraudster uses the address information on the stolen card. But at the last minute, just before the package gets shipped out, the fraudster will change the delivery address to their own address. The fraudster’s goal is to get the package with the card’s rightful owner to pay for it.
These are just some of the forms of e-commerce fraud. Being able to spot them will be a great help in preventing yourself from being a victim. However, many business owners fail to spot a fraudulent act early. This is why they should opt for other ways to combat them. Below are the solutions to prevent e-commerce fraud.
Ecommerce Fraud Solutions
1. Maintain regular audits of site security
Knowing your website’s weaknesses will allow you to be one step ahead of the fraudsters. Conduct a regular auditing schedule to ensure your site’s security. Also, consider regularly checking and updating your site’s information, such as passwords and emails. Weak verifying information is one of the main targets of fraudsters.
2. Secure a PCI-compliant business
The PCI stands for Payment Card Industry. This is essential, especially for e-commerce businesses, because this ensures the safety of the sensitive information on credit cards and prevents leakage during transactions.
3. Avoid billing errors
Errors in terms of billing or policies are the leading causes of chargebacks. Fraudsters have a keen eye on these errors and end up demanding a refund. You can prevent this by keeping a detailed record of all purchases wherein information regarding the date, products purchased, address is included to provide flawless billing receipts. Through these correct and informational receipts, you can fight back the false claims of the fraudsters.
4. Utilisation of an AVS
AVS stands for Address Verification Service, and this prevents fraudulent acts through their strict verification process before you purchase an item through the credit card. They check if the credit card billing address matches the cardholder’s address issued on the bank file. The AVS process helps prevent credit card fraud.
5. Demand for the CVV
The CVV process requires a customer to provide the CVV security code before making a purchase. The CVV stands for Card Verification Value. By requiring this, business owners can get assured that the customer has the credit card on hand. In addition to that, it’s illegal for business owners to store a customer’s CVV details, which reduces the chances of a fraudster sneaking into the information and, therefore, prevents the occurrence of card fraud.
6. Set a limit on the collection of customer data
Thieves can’t steal what you don’t have. Therefore, it’s recommended to only ask for the necessary data from customers that will be needed for the transaction and refrain from asking for other details, especially sensitive ones. This will prevent fraudsters from getting a reach of customers’ personal data.
7. Invest in anti-fraud solutions
Given the high number of fraud cases occurring, it’s highly necessary to invest in a professional eCommerce anti-fraud solution. Various software will help you spot and prevent fraudsters from adding your website to their victims’ list. Here are some of the anti-fraud solutions that you can apply on your e-commerce website:
8. Rudimentary anti-fraud tools
These tools detect fraudulent activity through the utilisation of IP geolocation, verification of addresses, and device fingerprinting. However, they are usually only applied in online shopping carts and e-commerce platforms.
9. Mid-level anti-fraud tools
Compared to rudimentary anti-fraud tools, mid-level tools offer various functions. These tools provide protection against suspicious accounts such as new accounts and account takeovers. It also has a feature that allows it to decline risky orders automatically.
10. Top-level anti-fraud tools
Among these tools, these tools offer the greatest protection against fraudsters. By investing in these tools, you get the functions of both tools above with bonus functions such as outsourced case and loyalty fraud management, protection from policy abuse, and ensuring a smooth transaction with customers while ensuring that no legitimate orders are declined.
If fraudsters are able to keep up with technological advancements, then business owners can also do so. Many fraud cases would have been prevented if only business owners could spot the fraudulent act early. This is why having knowledge on these topics will be of great help in keeping yourself from being a victim.
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