The eCommerce sector is one of the industries that flourished even amid the global crisis. It has done a great job in providing a seamless customer journey. As a result of this, customer expectations have skyrocketed—they wish to have instant satisfaction, personalization, and fewer hurdles in the checkout process.
With great success comes great challenges—numerous types of eCommerce frauds! Your biggest challenge is not to become a victim of digital fraud with effective eCommerce fraud prevention methods. Scammers are looking for ways to steal money from your customers. It is a problem that several companies are facing with numerous types of eCommerce frauds.
Let the stats do the talking!
Experian detected that losses from fraudulent identities enlarged from 51% in 2017 to 57% in 2019. As per PwC, these crimes cost agencies $42 billion in the last 24 months.
Fraud is getting prevalent with every passing day since fraudsters are not leaving any stone unturned to exploit the eCommerce industry. They do this by tricking the customers into stealing their data and breaching their privacy.
There is a litany of frauds, ranging from phishing techniques to chargeback frauds that exploit user experience. Every time the merchants and customers come across each other, there is a potential for eCommerce fraud.
In this blog, I will try my best to create awareness regarding these fraudulent activities across the customer journey and discuss the types of eCommerce frauds.
1- Creating a Fake Identity
Fraud is committed by creating a synthetic identity in eCommerce. Fraudsters go on a shopping spree and leave behind outstanding balances. This is particularly challenging for eCommerce merchants as it gives them a tough time identifying legit transactions.
These fraudsters make fake online accounts with a combination of information from different accounts to show it as a real person’s account. This disturbs the effort of eCommerce merchants who consistently strive to provide a personalized customer experience.
2- Classic Fraud
Amongst many types of eCommerce frauds, this type of fraudulent activity can be termed the easiest. Criminals purchase credit card details of the victim from the dark web. This is followed by buying products online from an eCommerce store.
This also results in customer dispute, since the actual card owner has not made the purchase himself.
3- Triangulation Fraud
When discussing different types of eCommerce frauds, this fraud involves three parties; a shopper, a fraudster, and a fully functional eCommerce business. I am sure you might have come across some fishy online stores that offer incredibly cheaper products. They thrive on your temptation actually.
When you decide to make a purchase and enter your credit card details, this sensitive account information goes to the fraudster. You can imagine the rest!
4- Interception Fraud
In this scenario, the fraudster places an order with a legitimate stolen card with shipping and billing information matching the card details. Here is the tricky part; those fraudsters then try to reach eCommerce customer services (through numerous ways) to change the shipping address.
5- Account Hijacking Fraud
This is one of the common fraud methods adopted by eCommerce fraudsters. Criminals take control of the user’s account either through phishing schemes, buying personal information, and stolen passwords from the dark web.
After acquiring control, they commit numerous criminal activities—withdrawing funds, changing shipping details after making the purchases.
6- Chargeback Fraud
It is sometimes dubbed as friendly fraud. This type of fraud happens when the fraudsters make a purchase online and then request the banks to return the transaction value. They do this by claiming that the transaction was invalid.
Other instances include; arguing that the product was never delivered or that they have returned the product to the merchant but that return was not processed—hence getting the amount from their credit card company.
eCommerce Fraud: Prevention is Better Than Cure!
As these types of eCommerce frauds are getting common, customers are advised to be very careful when making online purchases. Fortunately, there are tips that you can adopt to avoid frauds.
- Implement Biometric Verification which stops unauthorized access to your account for eCommerce fraud prevention.
- Implement Identity Verification through original documents in your account opening process.
eCommerce fraud prevention can be achieved if you have enough knowledge of how these types of eCommerce frauds are performed. This way, you can adopt best practices and the right resources to combat such criminals.
If you need foolproof eCommerce services, you can always reach out to the experts at Commersys.