The eCommerce sales are speculated to collect $3.914 trillion in 2020. And this makes eCommerce fraud prevention a top priority of the online merchants.
Cybercriminals are coming up with sophisticated tactics to penetrate into the eCommerce site and exploit the data for malicious purposes.
What Is An eCommerce Fraud?
eCommerce fraud is a type of fraud that happens on an eCommerce platform. Using a false identity, fake or stolen credit card, and fraud advertising are some of the ways eCommerce frauds are carried out. When customers engage in fraud on the online store, it’s the merchant that bears the cost. And as a result, they lose their market integrity.
Merchants have to use eCommerce fraud prevention best practices to ensure the integrity of their business.
What are the Types of eCommerce Fraud?
Following are some of the forms of eCommerce fraud:
- Card Testing: It is also known as card cracking. And in this fraudsters get access to stolen credit cards.
- Refund Fraud: It uses a stolen credit to make a purchase online. Thereafter, the fraudster contacts the merchant and requests a refund because of an accidental overpayment.
- Friendly Fraud: It is also known as chargeback fraud. This occurs when scammers buy a product or service and then request a reimbursement claiming an invalid transaction.
- Account Takeover Fraud: It happens when someone gets access to a user’s account on an online store. Once they get access to the count, they can engage in fraudulent activities.
- Interception Fraud: In this fraudster place orders on the eCommerce site where the shipping address and billing address aligns with information associated with the stolen credit card.
Best Practices to Prevent eCommerce Fraud
Below are some of the eCommerce fraud prevention best practices:
1. Safeguard Your Customers
In the era of massive data breaches, consumers expect the companies that they prioritize data protection. In fact, over half of the victims of Account Takeover attacks say that they have stopped using online shopping altogether.
And, these affected people were also loyal customers of the company. Breaching their trust reflects badly on the company and results in the loss of customers’ value.
In account takeover, fraudsters leverage bots that try millions of passwords every second. Once they are inside, these scammers change different information fields simultaneously, such as shipping address, phone number, email address.
2. PCI-DSS Compliance
Maintain a secure connection for your online payment by making the business Payment Card Industry or PCI compliant. The PCI Data Security Standard (DSS), is a collection of security guidelines that merchants need to follow.
They are developed to make sure the organizations internationally accept, process, store or transmit credit card data while being in a secure environment. Execute PCI scans various times a year to mitigate the risks of vulnerabilities.
3. Verification of IP Address
If the IP address is from a different location than the billing or shipping address, then chances are it is a fraudulent customer. Similarly, if the IP address belongs to a proxy server or web hosting company as opposed to an individual account, this is also an indication of fraud.
In this case, you need to deploy eCommerce fraud prevention solutions that are specially developed to oversee, track, and resolve these discrepancies.
4. SSL Certification
This certification assists in authenticating the identity of your organization and encrypt data in transit. It offers additional protection to the business and for customers. For instance, when you authenticate a credit card payment; a dedicated payment gateway will leverage the online address verification services.
So this address along with the card authentication system protects fraudulent purchases by matching it with the information listed online with the credit card company.
5. Chargeback Prevention
The cardholders themselves facilitate a chargeback fraud. They buy items online to claim that they have been defrauded. If the merchant cannot validate that the holder has authorized the said transaction, then the overall purchase amount is refunded to the customers.
This means that while the merchant incurred loss, the customer gained money and also got to keep the products. One of the best eCommerce fraud prevention best practices is to deploy a comprehensive and effective chargeback prevention solution.
6. Fraud Management Solution
This approach is recommended by a lot of experts. It provides proactive mitigation of potential fraud prior to it happening. For instance, 3D-Secure is a stepwise cardholder verification process that ascertains security for every transaction.
It typically requires the users to enter the security code for the input validation. Moreover, it transfers the responsibility of the merchants for the sale to the bank of the customer in case of litigation. This practice is commonly taken up with credit card companies.
Above, we have listed some of the most effective ways to practice eCommerce fraud prevention practices. Implementing comprehensive fraud prevention strategies will enable you to secure the eCommerce platform from fraudsters and hackers. It will eventually allow you to take the benefits of your online sale.
Infographic created by Fiserv, an omnichannel eCommerce company