Ecommerce fraud is on the rise, and to make matters worse, eCommerce stores have to fight fraud targeting merchants while protecting their customers at the same time.
Ecommerce fraud is complex and continuously evolving, as cybercriminals are always devising more advanced methods. Cybercriminals only need to be right only once, while eCommerce merchants have to be right all the time to prevent fraud. As a result, online merchants can’t afford to relent in their fight against fraud. Let's take a look at types of eCommerce fraud and how to prevent them.
- Card testing fraud
Credit card testing is when a fraudster uses your online store to test if the credit card information they have stolen is correct or not. The idea is to make small purchases that are hard to notice, and if the card passes the test at your online store, they can make expensive purchases.
You can protect your eCommerce store from card testing fraud by monitoring attempts to defraud your business. Using fraud detection tools from a reliable fraud prevention company like SEON, you can learn the patterns that fraudsters are using, monitor where the attacks are coming from and how often they occur. You can then use this information to enhance detection and prevent your online store from being scammed.
- Chargeback fraud
Chargeback fraud, also known as friendly fraud, is painfully simple to execute and probably the most common type of eCommerce fraud. It occurs when someone buys a service or a product online and files a chargeback after receiving the product or service. Sometimes the customer may not have malicious intentions at all, hence the term friendly fraud. It may be a result of unclear merchant descriptors, where if a customer notices an unfamiliar transaction, they will file a chargeback to dispute it. You can prevent chargeback fraud by ensuring your descriptor is clear and use a chargeback management tool to manage disputes.
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- Account takeover fraud
Account takeover is when a malicious actor gains access to a customer's account in an online store. It can be through various methods including, phishing and purchasing stolen passwords, personal information, and security codes on the deep web. Once a fraudster has taken over a user's account, they can make purchases in an online store, change the user's details, make withdrawals, and access the user's other accounts, among other fraudulent activities.
As an online merchant, there isn't much you can do to protect yourself, which is part of why it has become so prevalent. However, there are some fraud management solutions that can help to minimize account takeover fraud by using location data or device fingerprinting to red flag anomalous activity. On their part, customers should do more to avoid being victimized. They should use password best practices, be smart about phishing schemes and use multi-factor authentication when shopping online.
Endnote
The eCommerce world is complex, and cybercriminals are intelligent and can think outside the box to achieve their goals. If you run an online store, be sure to use reliable online fraud detection and prevention tools to protect yourself from these malicious actors.
