E-commerce fraud is a type of criminal deception that takes place during a commercial transaction. Such criminals have the goal of getting personal or financial gain through the internet. It may negatively influence you as a merchant due to the high cost to be paid. Ecommerce fraud is also known as payment fraud.
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Types of E-commerce Fraud
- Affiliate fraud
- Credit card fraud
- Chargeback Fraud
- Account takeover
- Triangulation fraud
- Interception fraud
How to Detect E-commerce Fraud Online?
- When the order is larger than what your clients spend on average
- If your client always invests in your store from a specific IP address, you suddenly change the IP address when purchasing at an unusual place.
- There is inconsistent order data where the city and zip code entered don’t match or the IP address doesn’t match.
- When a customer makes many purchases at a single billing address, shipping goes to different addresses.
- When a client makes many transactions in a short period
Steps for Preventing E-commerce Fraud
The key thing to account for when you want to prevent e-commerce fraud is identifying the causes and taking various effective preventative measures. This is essential to protect your online store and reduce the risk of fraud.
Based on the software you have, you can use technical and non-technical tools to detect and prevent fraud. Here are strategic steps you can implement and prevent e-commerce fraud:
Inspect Your Site Regularly
Some e-commerce stores hire officers who prevent fraud to catch shoplifters. Inspecting your store in case of any suspicious activity helps to protect your business against fraudulent transactions. Always monitor your transaction to identify red flags such as inconsistent shipping information or inconsistent billing and the IP address of your customers. Use tools to help you track your clients’ IP addresses and alert you when they change location
Request Card Verification Value (CVV)
Card Verification Value is a three-digit code on the back of a Master Card or VISA and a four-digit number on American Express debit and credit cards. When you request this verification value from every customer in each transaction, you ensure the customers have the card, and it also helps to reduce and keep fraud.
Avoid Collecting a lot of Customer Data.
Collecting and storing a little customer data helps your store in case a hack or breach occurs. Hackers will not find adequate information since you have not collected it. You just collect the data you need to make a complete transaction and ship products. Avoid collecting unnecessary customer data like birth dates.
Set a Limit on Purchases
According to your store’s orders and revenue trends, set limits for a certain number of purchases and the amount to be accepted from one client in one day. It will help reduce the exposure of fraud occurring.
Other effective steps may include:
- Avoiding non-physical shipping address
- Using Address Verification Service (AVS)
- Conducting site security audits often
Fraudsters may be getting more sophisticated in attacking online merchants, but merchants are also more sophisticated in detecting and preventing online criminals. When you have understood how to detect fraudsters, you can take the essential steps to prevent merchant fraud.