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.
- 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.
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The mistakes I see merchants make when they try to stop fraud
I've worked with enough online retailers now to know that most fraud prevention fails not because businesses lack tools, but because they use the tools wrong. Everyone buys a fraud detection platform, switches it on, and assumes the job is done. It isn't. Here's what goes wrong in practice.
The biggest error is treating every fraud type the same way. Friendly fraud (a customer disputes a charge after receiving the goods) needs a completely different response to triangulation fraud (a fake storefront collects real card details and never ships anything). If you apply one blanket rule set to both, you'll either block genuine customers or let real fraudsters through. I've seen shops lose thousands in chargebacks because their system flagged suspicious IP addresses but ignored mismatched billing and shipping names, which is a much stronger signal for account takeover fraud.
Second mistake: relying purely on rules instead of pairing them with behavioural data. Rules like "block orders over £500 from new accounts" get worked around within weeks because fraudsters test thresholds. What works better is watching behaviour: how fast someone fills a checkout form, whether they paste in card details versus type them manually, how many payment attempts happen in a short window. Bots and fraud rings move differently to real shoppers, and in 2026 most decent fraud tools now score this behavioural pattern alongside the transaction data, not instead of it.
Third: ignoring refund and return abuse as a fraud category. Wardrobing (buying, using, then returning items), empty box scams, and refund fraud through fake tracking numbers cost retailers a fortune and rarely get logged under "fraud" internally, so nobody builds a defence against it. If your returns team isn't flagging repeat offenders across email addresses and shipping addresses, you're leaving money on the table every month.
What's changed recently is the sophistication of synthetic identity fraud, where criminals blend real and fake data to build a customer profile that passes basic checks. A stolen National Insurance number combined with a made up name and a real address can pass address verification and still be entirely fraudulent. Static verification checks don't catch this. You need ongoing monitoring that looks at how an account behaves after the first purchase, not just at checkout.
My advice for anyone reviewing their fraud strategy this year:
- Segment your fraud rules by fraud type, not by a single risk score
- Add behavioural signals alongside transaction rules
- Track returns and refunds as a fraud category with its own metrics
- Reassess your synthetic identity exposure, especially if you sell high value items
- Review false positive rates monthly, because blocking real customers is its own cost
More questions
What is the difference between friendly fraud and chargeback fraud?
They're often used interchangeably but there's a distinction. Friendly fraud usually happens when a customer forgets a purchase or a family member used their card, then disputes it out of confusion. Chargeback fraud is deliberate: the customer receives the item, knows exactly what happened, and disputes the charge anyway to get a free product. Both result in the same chargeback, but the prevention approach differs. Clear billing descriptors and order confirmation emails reduce the first type. Detailed delivery evidence and signature confirmation help fight the second.
Can small ecommerce businesses afford proper fraud prevention?
Yes, and most underestimate
Related reading: How to Prevent Your Business from Being Robbed Online and Understand How Online Fraud Works and Learn How to Protect Yourself.
