Risk Factors Associated with E-Commerce Fraud
E-commerce fraud is the use of fraudulent means to obtain money or goods through online transactions. The consequences of e-commerce fraud can be significant for businesses. They include financial loss, damage to reputation, and loss of customers.
To help reduce the risk of e-commerce fraud, here’s a breakdown of the different types of e-commerce revenue fraud schemes with examples.
Types of E-Commerce Fraud
There are several types of e-commerce fraud you should be aware of. These include:
Account Takeover Fraud
Account takeover fraud is the unauthorized use of an account that belongs to another person. This can be done by stealing personal information, such as a social security number, or by hacking into a computer system. Once the perpetrator has access to the account, they can use it to make fraudulent purchases or withdraw money.
An example of this would be if someone gained access to your bank account information and used it to make unauthorized withdrawals or purchases.
Friendly fraud is a term used to describe when someone uses a credit card or other type of payment method to make a purchase, but later disputes the charge through a chargeback. The perpetrator does this intending to keep the product or service without paying for it. This can be done by either contacting the merchant directly and alleging that the product was not received or defective, or by filing a dispute with the credit card company after the fact.
Interception fraud occurs when the perpetrator uses a stolen credit card or a hacked third-party payment system account to purchase online goods. Once the order is placed, the fraudsters then attempt to intercept the parcel using one of the following methods:
- Stealing the order from the drop-off location.
- Redirecting the parcel by contacting the online store and requesting the order be sent to an address of their choosing.
- Contacting the shipping company and rerouting the package to a destination of their choice.
How Can You Identify E-Commerce Fraud?
There are a few ways to identify e-commerce fraud. One way is to watch for anomalies in customer behavior, such as sudden spikes in activity or orders placed from unusual locations. You can also look for discrepancies in order information, such as mismatches between the shipping and billing addresses or items ordered that don’t seem to be related. Additionally, you can use security features like two-factor authentication to ensure that the person placing the order is actually the customer.
Can You Prevent E-Commerce Fraud?
It is possible to prevent fraud. To do so, online businesses need to understand which types of attacks are possible. With this knowledge, appropriately placed security measures can help to protect both the business and their customers.
One of the most important things businesses can do is to make sure the business has a secure website. This means using strong passwords, encrypting information, and firewalls. They should also keep their software up to date. You could also use a fraud risk assessment checklist or survey to determine if there are any vulnerabilities in your business or website.
With these tactics working in unison, your e-commerce store will be more secure and impervious to fraudulent activities than ever before.