{"id":18732,"date":"2022-03-29T01:54:41","date_gmt":"2022-03-29T01:54:41","guid":{"rendered":"https:\/\/www.sellersnap.io\/?p=18732"},"modified":"2023-11-07T07:51:42","modified_gmt":"2023-11-07T07:51:42","slug":"how-to-spot-ecommerce-fraud","status":"publish","type":"post","link":"https:\/\/www.sellersnap.io\/how-to-spot-ecommerce-fraud\/","title":{"rendered":"A Guide on How to Spot eCommerce Fraud Before It Ruins Your Business"},"content":{"rendered":"

Running an online business is a challenge. For online shops, there is the issue of<\/span> shopping cart abandonment<\/span><\/a>. If you\u2019re a<\/span> virtual law practice<\/span><\/a>, there\u2019s the difficulty of maintaining confidentiality. Even for bricks-and-mortar outlets, operating in the online space is an important stream of revenue. The biggest challenge for any online business is ecommerce fraud.<\/span><\/p>\n

Ecommerce fraud is a threat on many levels. It can impact revenue, credibility, brand reputation, customer loyalty, and even<\/span> scaling in business<\/span><\/a>. Online fraud takes various forms. In tackling it, there is a range of approaches. Let\u2019s take a look at exactly what ecommerce fraud is, how to recognize it, and how to stop it before it ruins your business.<\/span><\/p>\n

What Is It?<\/b><\/h2>\n

Ecommerce fraud consists of a variety of criminal activities targeted at online platforms. It can range from identity theft to stolen credit cards. It can be perpetrated by hackers and, sometimes, by customers.<\/span><\/p>\n

Although it\u2019s an ever-increasing threat to businesses, catching and prosecuting ecommerce fraudsters is complex and expensive. Consequently, convictions are rare. The best option for online businesses is to put their energy into prevention. The first step is understanding the range of fraudulent activities your business might face. Here are the most common types:<\/span><\/p>\n

Payment Fraud<\/b><\/h3>\n

This is the most basic and common type of fraud. All businesses can fall prey to payment fraud, particularly through CNP transactions (card-not-present). Stolen credit cards are used for purchases which are then sold on for a profit. Stolen cards can also be used to buy gift cards and vouchers.<\/span><\/p>\n

An offshoot of this type of fraud is \u201ccard testing.\u201d This is when fraudsters make small purchases using stolen cards to test if the card works. These purchases aren\u2019t the end goal, but if successful and unnoticed, they give criminals the green flag to go on and spend large amounts, usually on different sites.<\/span><\/p>\n

Interception Fraud<\/b><\/h3>\n

Closely related to payment fraud is interception fraud. Here, fraudsters intercept and take products when they\u2019re out for delivery. They place an order using a shipping address linked to a stolen payment card. To get their hands on the item, fraudsters either contact the delivery service to redirect the package, or they lurk close to the address of the victim (the genuine owner of the stolen card), sign for the package, and steal the package, literally intercepting it on the victim\u2019s doorstep.<\/span><\/p>\n

Basically, fraudsters look for weak or unguarded links in the order and delivery journey. Businesses that don\u2019t have secure systems in terms of<\/span> order management ecommerce<\/span><\/a> are leaving themselves wide open to interception fraud.<\/span><\/p>\n

Account Takeover Fraud (ATO)<\/b><\/h3>\n

This form of ecommerce fraud is exactly as it sounds. Criminals gain access to and take control of a user\u2019s account. It\u2019s a form of identity theft where fraudsters use stolen personal information and passwords to log into a customer\u2019s account and then make purchases or use services. They will also change passwords and other personal information, locking the genuine customer out of their account.<\/span><\/p>\n

This type of fraud not only affects retail; gaming and streaming platforms can easily fall prey also. When it comes to issues of<\/span> streaming security and performance<\/span><\/a>, account takeover is a major concern.<\/span><\/p>\n

Friendly or Chargeback Fraud<\/b><\/h3>\n

Here, the customer makes a purchase online but then claims that the transaction is invalid and asks for a chargeback. The card company is duty-bound to reimburse the customer, leaving the retailer or service provider out of pocket. Sometimes, the customer is acting in good faith, but often they aren\u2019t. They might, for example, lie about not having received an item, or they may claim that an item they returned was never refunded.<\/span><\/p>\n

Refund Fraud<\/b><\/h3>\n

Refund fraud is closely related to chargeback fraud. It involves a fraudster asking to be reimbursed because of accidental overpayment. The fraudster then asks for the refund to be paid to a different card, the original card is then not refunded, and the retailer ends up liable for this amount.<\/span><\/p>\n

Triangulation Fraud<\/b><\/h3>\n

A little more complex in its setup is triangulation fraud. As the name suggests, it\u2019s a three-sided arrangement. It involves a fraudster, a shopper, and an ecommerce business.<\/span><\/p>\n

The fraudster sets up a fake storefront on a retail platform. The items for sale are usually high-cost goods at bargain prices. Customers are attracted to the shop and place orders; the fraudsters then use stolen credit cards to buy goods from a legitimate online business which they then sell to the fake store customers.<\/span><\/p>\n

The real losers in this scenario are the unfortunate owners of the stolen cards, but a legitimate business could also be stung financially if the cards are identified as stolen and, by association with a scam, could also see their reputation damaged.<\/span><\/p>\n

Retail Arbitrage Fraud<\/b><\/h3>\n

This fraud involves a buyer making huge quantities of purchases via malicious bots. The goods are then resold on a different platform. This activity causes wildly varying prices across the market and can destroy a customer base and profits.<\/span><\/p>\n

New Account Opening Fraud (NAO)<\/b><\/h3>\n

Here, a fraudster will create a new account from parts of stolen, real identities. They can use this account to take advantage of offers and deals. As the fraudsters are using bits of true identities, it can be hard to identify this method of fraud.<\/span><\/p>\n

How to Spot It<\/b><\/h2>\n

Of course, ecommerce fraudsters aim to stay unnoticed by their victims, but fraud is never invisible. Any guide on <\/span>small business management tips<\/span><\/a> will talk about the importance of keeping a close eye on your business transactions on a daily basis. The same goes for being alert to fraud. There are definite tell-tale signs that companies can look out for. Here\u2019s a list of the most common ones:<\/span><\/p>\n

Common Signs<\/b><\/h3>\n