Common E-Commerce Frauds to Be Aware Of

Learn the different types of e-commerce frauds and steps to avoid them.

5 Steps to take to prevent e-commerce fraud

E-commerce or electronic commerce, is the business model that allows companies and users to buy and sell services over the internet. Over the years E-commerce businesses have reached new heights. But with such advancements also comes the risk of fraudulent and cheating. With most businesses moving online, educating yourself about different types of online frauds can help you from falling into such traps. 

So, what is e-commerce fraud? 

E-commerce fraud, also known as purchase fraud, is when an illegal transaction happens without the owner's knowledge. Fraudsters do these transactions by stealing your personal information. 

Also Read: Cyber Fraud: Common Financial Scams And How To Avoid Them

Here are the few types of e-commerce fraud to be aware of

Card Testing Fraud 

Card testing fraud is when fraudsters steal information of one or more stolen credit numbers through theft or purchasing card data on the dark web. Initially, small purchases are made to test the card and check if they can make successful transactions. Unfortunately, these small transactions usually go unnoticed. 

Here are the few steps you can take to prevent card testing fraud

  1. Use of AVS and CVV matching. 
  2. Monitoring IP addresses
  3. Implement velocity check 
  4. Monitor IP addresses and do not approve any message

2. Chargeback Fraud 

Chargeback fraud, also known as friendly fraud, is when someone purchases an item and then asks for a chargeback claiming an invalid transaction. This type of online fraud is done to ask for free products or false refunds. If you're an online business owner, you can use a chargeback management software tool to reduce such online fraud risks.

3. Refund Fraud 

Refund Fraud is another online fraud to ask the merchant or business owner for money. In these cases, the fraudsters make payments using a stolen card and ask for a refund into a different account. Refund fraud is very dangerous, as it often appears genuine, and many e-commerce merchants get stuck in the middle of it by paying a full refund. 

4. Identity Fraud 

Also known as account take over fraud, where someone else takes over the other person's account to make an online payment. This is usually done by purchasing stolen passwords, security codes, or personal information. Fraudsters often also try phishing schemes against customers to get hold of their personal information. To prevent such fraud, it's advisable to create a strong password. Also, use different passwords for different sites, and set rate limits on login attempts.

5. Interception Fraud

In this type of fraud, an order is placed on your e-commerce website with a billing and shipping address that matches the stolen credit card, and later fraudsters try to intercept the product to take it for themselves before delivering. They often also contact the shipping site to redirect the package and take it themselves. To prevent such online frauds, shipping sites rarely accept redirecting requests, and, as an online store owner, you should also confirm before sending the shipment. 

Also Read: How to Protect Your Credit reports From Fraud


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