eCommerce is a booming industry. In fact, according to a Statista report, the global projection for e-retail is estimated to be 5.4 trillion US dollars.
This means, if you are in eCommerce, this is the golden era of the eCommerce sector.
But no matter how excited your nerves are right now from the idea of the opportunities that the landscape has to offer, here’s a word of caution.
With unchecked opportunities lies equal threats.
In a time of digitization and internet cash flow, getting attacked by scammers and frauds is no unusual incident. Infact, if you think you never got attacked by any cyber-attacks, then think again. Chances are the attacks are just in the dormant stage.
So the question is how to protect your eCommerce business from these harmful threats?
Do we see fret lines?
Don’t worry. Your rescue squad is here.
In this blog post, we reveal five eCommerce frauds that continue to ravage your lives just like the pandemic. But unlike the pandemic, we have the complete solution to protect from these problems. Let’s begin.
5 eCommerce frauds that plague business owners (& how to avoid them) in 2021
eCommerce fraud occurs in all shapes and sizes. With the growing eCommerce economy, fraudsters are becoming more intelligent and devising more sophisticated methods to steal sensitive information. According to some reports, occurrences have resulted in a colossal $20 billion in revenue in 2021 alone. This means finding a cure to fraudulency in the eCommerce landscape starts with root cause analysis.
Without understanding the core intention, the activity that the fraudster is trying to perform is almost impossible to protect your business. This means finding specifics like name, credit card information, transaction history, or audience profile is critical here. On the basis of the findings and the most common methods of data stealth that occur in the landscape, devising strategies and protection tools is easy.
In the following section, we talk about the 5 most experienced eCommerce frauds and how you can successfully avoid them in 2021.
1. Identity theft fraud
Identity theft is the most common type of scam in the eCommerce industry accounting for almost 3 quarters of almost all the attacks.
Here, the fraudster steals information from genuine customers like their credit cards, emails, usernames, accounts, and other personal information. This means they not only steal unauthorized information but also impersonate their identities.
What follows is access breaches that subject all your sensitive data to vulnerable conditions. The scammers can misuse the data whenever they like, wherever they like. For instance, it can create fake accounts and manipulate traffic. This makes identity theft prevention a primary step towards creating a secure landscape for your eCommerce business.
The first thing that you can do here is to create strong password hygiene amongst your customers. Ask them to renew their passwords periodically. Again, the passwords must not be too simple. The best way to do this is to create complex passwords combining alphabets, numbers, and special characters.
Another important protection discipline is to store your data in encrypted files. Also, it is a good practice to not store any non-essential customer data especially credit card information in your servers. This reduces the probability of your customer data getting compromised by exponents. But this is not all.
Keeping your applications and systems always updated with the latest protection security is critical for ensuring comprehensive security. This ensures that scammers cannot infiltrate the websites and crawl into the systems which are not secured enough.
2. Friendly fraud
If there is one fraud that camouflages itself like a genuine buyer like breeze, it is the friendly fraud.
Abusing the loopholes of the extensive return policy that the eCommerce industry has to offer, a friendly fraud falsified a genuine transaction claiming it to be invalid.
The worst part?
With the rise of the eCommerce industry, friendly fraud has seen steep growth.
Generally, it occurs by fraudulent customers claiming the invalid transaction as they request a chargeback from the payment platform when they buy a product or use any service online. Therefore, the credit card company returns the payment made by the customers but still is made to be paid by the retailers. But with a strategic approach, you can ensure you do not fall prey to these scammers.
Identifying friendly fraud at the core starts with validating your customers. This means tracking their buying habits can reveal to you any unusual activity on your customer’s accounts. In case any such unusual activity occurs, you can easily communicate and validate the order with your customer. This way you can keep the scammers out of your system. But to ensure comprehensive protection, you need to go deeper.
Rethink your refund policy. Ensure that you accept returns and exchanges only under specific terms. Put a time constraint on your returns, add a clause to ask your customers to show their ID proof while doing so. Also, supplement cash returns with credit-only exchanges. This will ensure no one abuses your return policies.
3. Clean fraud
Clean fraud is one of the most concerning problems that business owners are facing today. This fraud generally occurs through stolen credit cards in which the transactions may seem validated, but it is not flagged and will not be picked by the scam filters or blacklist.
This type of fraud is carried out by the most professional types of scammers who know ways to bypass the fraud prevention techniques which are being used. It can prove disastrous for your business because it is extremely difficult to avoid this scam even with the use of modern technology.
This fraud can be made by the scammers by impersonating another person’s cardholder using their personal information, by hat which makes the transaction looks valid and it’s difficult for blacklist and fraud list to detect this scam.
The victim may also not be aware of this fraud until they receive the transaction details. Fraudsters generally can get access to the details of the victim’s data and his credit card number.
Although clean fraud is hard to detect, there are still some preventative measures that can be proved beneficial to avoid this fraud. Deeply analyzing the consumer data from multiple areas or sources may help to reduce the risks of this fraud. Moreover, using advanced fraud detection techniques such as scam detection and customer authentication may prove beneficial for your eCommerce business by having an expert-guided approach.
4. Account takeover fraud
Account takeover fraud generally occurs when the fraudster manages to gain access to the victim’s bank account and tries to steal funds while taking control of it. Due to the enormous amount of financial losses, account takeover fraud is a huge threat to online eCommerce businesses.
The dark web may also be another resource for cybercriminals in which they can purchase personal details of the victim like emails, credit card numbers which can be proved as a valuable asset for the criminals.
When the scammers can gain access to the victim’s account, it can lead to fraudulent payments and unauthorized shopping from the victims’ bank accounts. Some of the methods include for account takeover fraud are phishing, different malware, sim card swapping, credential stuffing, and so on.
These types of frauds may be avoided with the usage of multi-factor authentication, like most of the banks’ biometric services, and facial recognition software which is the first line of defense for preventing an account takeover fraud. Moreover, machine learning is also pretty much effective along with fraud detection systems to minimize the risk of being the victims of cybercriminals.
5. Triangulation fraud
Triangulation frauds are by far the most sophisticated frauds that eCommerce businesses have to suffer.
Typically, it involves three foundational pillars: a scammer who sets up a storefront imitating a genuine buyer, a genuine consumer placing an order on the scammer’s website, and a genuine eCommerce website, which fulfills the order in real life.
The abuse happens when all these sources are abused by the scammer with the help of authentic resources and data. In such a scenario, the scammer uses the details of a stolen credit card information to order the product that the consumer wants to be shipped at their shipping address. After the delivery happens, the scammer claims a chargeback which enforces the eCommerce store to oblige to the refund value.
What follows is a loss that affects multiple people and extends risks beyond multiple paradigms. However, you can stop this. You can use biometrics, session timeouts, data entry familiarity, order patterns, buying habits, and more to track these malpractices.
The world of online business is complex. Cyber attacks are no longer a coincidence, especially for businesses. This makes creating a robust and agile protection system critical.
The above tips are sure to give you a great headstart for this year but you need to stay prepared ahead of time. To do this, you need to map the unique challenges and vulnerabilities that your business digital space has. This will give you a comprehensive idea of how to optimize your business security. Your customers can be a huge asset in developing protection policies here.
So, now when you know how to start your business with digital protection, it is action time. When are you taking the plunge to scam proof your business?