By using this site, you agree to the Privacy Policy and Terms of Use.
Accept
Start Your Business Magazine
  • Topics

    Grow, expand and leverage your business..

    Grow your start up business with our experts and industry insiders…

    Get Started

    Quick Links

    • Finance
    • Marketing
    • Technology
    • Business Books
    • Wellness
    • Interviews
    • Franchise

    Our Newsletters

    Our website stores cookies on your computer. They allow us to remember you and help personalise your experience with our site..

    Read our privacy policy for more information.
  • Trending
    TrendingShow More
    Communicate Better
    Start Your Business Start Your Business
    Majority of UK Employees Looking for a New Job
    Start Your Business Start Your Business
  • How To
    How ToShow More
    Tips for Running a Restaurant in the Most Efficient Way Possible
    Start Your Business Start Your Business
    Becoming self employed…
    Start Your Business Start Your Business
    Vet Start up
    Start Your Business Start Your Business
    Builder’s Growth
    Start Your Business Start Your Business
    Market for Construction
    Start Your Business Start Your Business
  • Agenda
    AgendaShow More
    How to Keep Your Business Compliant When Selling Internationally
    Start Your Business Start Your Business
    What does the future hold for plastic packaging?
    Start Your Business Start Your Business
    How International Hiring Can Help Startups To Scale In 2023
    Start Your Business Start Your Business
    Creating and Maintaining a Culture of Equality in Your Business
    Start Your Business Start Your Business
    The Great Resignation or Quiet Quitting
    Start Your Business Start Your Business
Reading: Ecommerce Fraud
Connect
Start Your Business MagazineStart Your Business Magazine
Aa
  • Contact
  • Blog
Search
  • Agenda
  • Blog
  • Finance
  • Growing
  • Marketing
  • Opportunity
  • Starting Up
  • Technology
  • Wellbeing
  • Contact
Have an existing account? Sign In
Follow US
  • RSS
  • Terms And Conditions
  • Privacy Policy
  • Contact
  • Licensing
Copyright © 2014-2023 Ruby Theme Ltd. All Rights Reserved.

Ecommerce Fraud

Start Your Business
ecommerce Uncategorized
Share
10 Min Read

5 Common Types of Ecommerce Fraud and How to Fight Them

If you run an ecommerce business, it’s likely that you’ve experienced some type of fraud. Scammers are creating more sophisticated ways to navigate some businesses’ fraud prevention strategies, finding out how to better imitate genuine customers. But how are they committing these acts of fraud and how can they get away with it? Here we explore five different types of fraud that ecommerce businesses encounter. Then, we’ll explore how you can combine positive customer experiences with an optimised fraud prevention strategy to protect your business.

Contents
5 Common Types of Ecommerce Fraud and How to Fight ThemPayment fraud, including identity theft Friendly fraudAffiliate fraudClean fraudInterception fraudFraudsters are just bad actors

Payment fraud, including identity theft 

Would you know if someone were pretending to be you? Payment fraud is one of the most common types of ecommerce fraud. In fact, payment fraud contributes to a whopping 71% of all online payment attacks. But things have moved on beyond fraudsters stealing bank or card details. Today, fraudsters will also use email accounts, user accounts, names, addresses, IP addresses, and personal devices to complete their purchase. For fraudsters, the hope is that all these details will make them look like the real deal – like you. This, in turn, can lead to fraudulent purchases and the creation of new fake user accounts.

Friendly fraud

Despite its affectionate name, friendly fraud isn’t all that welcome for ecommerce businesses. Also known as chargeback fraud, it occurs when a consumer (or fraudster) makes an online shopping purchase with a credit card but then requests a chargeback from the issuing bank after they’ve received the goods or services. The consumer may cite damaged goods or undelivered products as grounds for a refund. The stickler is, depending on the original payment method, the merchant can be made accountable when a chargeback happens. So as an ecommerce business, you’ve lost your goods and lost your money.

However, it must be said that sometimes chargebacks are legitimate, and friendly fraud can be unintentional. Perhaps goods were actually damaged or undelivered. Or the consumer doesn’t recognize the merchant on their credit card bill or has forgotten they made the purchase. But overall, 57% of chargebacks are classified as abuse. 

Affiliate fraud

Many ecommerce businesses will run an affiliate marketing program. Affiliate marketing is a method of advertisement where online publishers can make money by inserting links on their website. The links may direct customers to a product. These links can be tracked, and when a specified action takes place, such as an account registration or purchase, the affiliate who published the link will be paid a commission.

Affiliate fraud, therefore, plays a bad game in this marketing technique. By completing simple actions, fraudsters can profit from the commission of affiliate links. This may include auto-refreshing a page to imitate traffic or clicks or spamming an email from a referral link. Ultimately, the ecommerce business will believe that they have increased their onsite traffic but not see any increase in profits. In fact, they’ll be paying out to the fraudsters.

Clean fraud

It’s hard to identify a dirty transaction when they look so squeaky clean. Fraudulent transactions that appear to be legitimate are known as clean fraud, and it’s becoming an increasingly problematic type of transaction for ecommerce businesses. This is because the transaction is less likely to get flagged up or appear on a deny list for known fraud accounts. For clean fraud, fraudsters will usually use stolen credit card information to impersonate the real cardholder.

To make this fraud appear genuine, fraudsters will convince account holders to make a purchase through a fake website or by intercepting messages between transaction parties. Fraudsters can then use this data to complete a purchase. 

Interception fraud

There’s no messing about when it comes to naming types of fraud. Interception fraud does what it says on the label: it intercepts your online orders. The fraudster will use a stolen credit card along with the same billing address and shipping address that is linked to the card. The next step involves intercepting the goods before they are delivered.

How is this achieved? Well, a fraudster may call a company after the order is placed and before it has shipped. Then they will ask for the delivery address to be changed. They may also contact the courier to change the route of the package to a different address of their choosing. Even simpler (and potentially riskier), they may just wait for the package to be delivered at the cardholder’s address, sign for it, and steal it from right outside your front door. 

Fraudsters are just bad actors

It seems like there are many ways for outlaws to take advantage of ecommerce businesses in the Wild West of the online world. But despite more sophisticated methods of fraud becoming prevalent, ecommerce businesses shouldn’t fret too much. There is a solution and a way to fight back against these slippery scammers.

The difficulty with identifying scammers is that they’re getting very good at making themselves look like genuine customers. From stolen cards to fake user accounts, it may be difficult for a person or agency to recognize when their business is a victim of fraud.

There are ways to secure your ecommerce business. Putting more barriers in place to separate the fraudsters from genuine customers will help to prevent fraud. This may include identity verification, extra accounts and passwords, or a CAPTCHA test to dodge those pesky robots that are set up to do your business harm.

However, these extra barriers harm the customer experience of your ecommerce store. Did you know that the average online shopping cart abandonment rate is 70%? Factors such as barriers to completing transactions contribute to this. Promoting an easier sales experience, with less friction, is the best way to boost your business. Plus, there is a way to open your business up without letting fraudsters in.

In reality, fraudsters are bad actors. While they can wear the costume of stolen cards, addresses, and fake accounts well, their behaviour is a giveaway. Machine learning is becoming more and more capable of finding out when fraud is taking place, even when every other factor seems to be genuine. This takes into account things like delivery address, average consumer purchase size, historic chargebacks, buying behaviour, and the types of products a specific consumer would usually buy.

Machine learning becomes even more powerful when it is combined with a commerce protection network comprising hundreds or thousands of merchants. The network provides vision into millions of transactions and that data is vital to identifying fraudulent behaviour. 

One platform, Signifyd, says that 98% of all online purchases today have been made by consumers that their platform has seen before. This means that they will understand everything there is to know about a consumer’s buying behaviour, so if they or you are a victim of fraud, it can be easily spotted and prevented. This saves genuine customers time at the checkout and can save everyone from fraud.

Ultimately, if your business is looking for growth in the accelerating age of online shopping, aligning your fraud strategy with your customer experience strategy is a recipe for success. Positive customer experiences lead to return sales, and fraud prevention and payment optimization can only benefit an ecommerce business. Being recognized as a safe and reliable business with friendly and helpful staff is essential for long term survival in a competitive online world. Identifying these types of fraud and recognizing the most effective ways to deter criminals will help you grow.

Sources

https://www.ravelin.com/blog/5-types-of-fraud-that-is-used-to-target-e-commerce-retailers 

https://www.signifyd.com/solutions/abuse-prevention/ 

https://support.google.com/a/answer/1217728?hl=en 

TAGGED: header

Sign Up For Daily Newsletter

Be keep up! Get the latest breaking news delivered straight to your inbox.

By signing up, you agree to our Terms of Use and acknowledge the data practices in our Privacy Policy. You may unsubscribe at any time.
Start Your Business August 26, 2021
Share this Article
Twitter LinkedIn Reddit Email Copy Link
  • RSS
  • Terms And Conditions
  • Privacy Policy
  • Contact
  • Licensing

Get the latest from us delivered straight to your inbox

Start Your Business Magazine: The Ultimate Business Start Up Guide provides information advice and guidance for entrepreneurs and new business start ups. Get the latest from us delivered directly to your inbox.

Our website stores cookies on your computer. They allow us to remember you and help personalize your experience with our site..

Read our privacy policy for more information.

Copyright 2023 Gambit Interactive Media Limited – All Rights Reserved.

Manage Cookie Consent
To provide the best experiences, we use technologies like cookies to store and/or access device information. Consenting to these technologies will allow us to process data such as browsing behavior or unique IDs on this site. Not consenting or withdrawing consent, may adversely affect certain features and functions.
Functional Always active
The technical storage or access is strictly necessary for the legitimate purpose of enabling the use of a specific service explicitly requested by the subscriber or user, or for the sole purpose of carrying out the transmission of a communication over an electronic communications network.
Preferences
The technical storage or access is necessary for the legitimate purpose of storing preferences that are not requested by the subscriber or user.
Statistics
The technical storage or access that is used exclusively for statistical purposes. The technical storage or access that is used exclusively for anonymous statistical purposes. Without a subpoena, voluntary compliance on the part of your Internet Service Provider, or additional records from a third party, information stored or retrieved for this purpose alone cannot usually be used to identify you.
Marketing
The technical storage or access is required to create user profiles to send advertising, or to track the user on a website or across several websites for similar marketing purposes.
Manage options Manage services Manage vendors Read more about these purposes
View preferences
{title} {title} {title}
Join Us!

Sign up to our free newsletter and never miss a hot topic!

Zero spam, Unsubscribe at any time.
Go to mobile version
Welcome Back!

Sign in to your account

Lost your password?