The eCommerce Fraud Prevention Best Practices and Techniques

Many reasons exist for eCommerce fraud taking place, but most are due to today’s ease of tricking people online. Due to Covid-19, online fraud has become even more of an issue. Because most people use the Internet more while staying home, fraud cases have massively increased.

eCommerce fraud happens due to the ease in penetration. Long before the Internet became accessible worldwide, thieves stole credit card information by:

• Breaking into the victims’ homes or even their cars;
• Committing a robbery to a victim in person. 

The advantage of this is that police can catch thieves more easily, especially if witnesses are around to testify to the crime. And, of course, executing a theft in person takes a lot of strategic planning in order to not get caught. 

Nowadays, however, those involved in eCommerce crime are having an easier time. The information of credit cards and private data have become easily accessible on websites. By going to a website, Internet scammers can get credit card information to get whatever they desire.

Getting caught is a risk of physically obtaining money or goods. This may include the potential of getting identified by witnesses and CCTV.

But since everything is online nowadays, criminals don’t have to visit a physical store anymore. They can commit eCommerce fraud, obtaining what they want while staying unseen and anonymous.

All that’s needed is a computer or other technological device with an Internet connection. They then have the advantage of operating in any location, at any time.

If there’s one thing criminals are sure of, it’s that the police don’t see eCommerce fraud as a top priority. They can evade capture easily because:

• The money that is handled in fraud transactions is comparatively less than other crimes happening in a city;
• Online fraud transactions can happen outside the country, which blocks the police from capturing them.

These three major reasons increase eCommerce website owners’ guards against fraudulent acts. Hence, they will develop and institute eCommerce fraud prevention techniques.

Stealing people’s credit card information is not the only method to execute eCommerce fraud. These other cases of fraud still cause a significant loss to merchants on their website retail store and for each of the victims affected. 

The following are the types of eCommerce fraud to watch for.

Credit card fraud is the general and overarching term that relates to fraud done by using someone else’s credit card or debit card. The online scammer will use the stolen credit card to visit a website and make a purchase for goods or services.

With such easy access to the World Wide Web, these fraudsters can actually visit sites that sell stolen credit card information. Then they use these stolen cards to buy whatever they want. This then affects the owner of the store because they will have to give a refund due to an unauthorised purchase. 

Merchants are also victims of this trickery. An example involves a scam known as the “card testing scam”. Here, a scammer will make low-value test purchases to validate the stolen information they acquired. They will test multiple credit card combinations in order to check which ones are still active, so they can make purchases online.

Affiliate marketing is when you earn a commission through marketing a product produced by another person. These product or service creators pay you, their affiliate, a commission for sales in exchange for referring other buyers. 

It works like this: 

1. Affiliates use a trackable web link that’s unique to direct buyers to the eCommerce store’s page;
2. Buyers will purchase products under the unique link of the affiliate;
3. The affiliate will then receive a commission for every successful purchase.

A system like this actually makes it quite easy for criminals to deceive online sellers. They are able to manipulate this system and do so by using fake activities to generate money or even increase the commissions being offered. This is called affiliate fraud. 

Affiliate fraud may include things like: 

• Generating sales by using stolen credit cards;
• Typosquatting, or URL hijacking, means scammers register domains that are commonly mistyped so they can redirect people to another site; 
• Getting people to download adware or advertising-supported software that inserts affiliate code automatically.

A chargeback is when a buyer requests for the seller to refund a purchase because it’s involved in fraud or is a disputed transaction.

Chargeback fraud is when someone purchases products online with a credit card and receives it. Afterwards, they will demand a refund due to their disappointment with the product (or service).

This obviously creates disadvantages for the merchant selling the goods or services. Typically, this type of fraud happens when the customer demands their money back after weeks or months following the purchase.

Interception fraud is when the culprit cuts off the delivery of a product from its intended address. 

Here is an example: the scammer uses the stolen credit or debit card to purchase what they want online. When checking out, they will enter the original cardholder’s address for delivery. But before the item is shipped, the scammer calls the customer service department. Then they request the delivery address to be changed, giving their own address instead.

This scenario is usually considered reasonable. For example, a valid excuse could be if a buyer is not at home and would like for their friend to receive it on their behalf instead.

When online accounts that contain personal information are hacked, it causes a terrible situation for the victim. Scammers use phishing techniques to gain access to private information like:

• Financial data;
• Personal information;
• Purchase history.

Some methods of phishing involve using bots. These activities can go unnoticed. But the danger of identity theft haunts and causes devastating effects to the victim. Cybercriminals can use their financial information for more malicious activities in the future.

Online scammers are good at hiding their tracks and movements. However, they are not invincible. 

It is possible to identify and stop them before they cause major harm to your eCommerce store and its customers.

Security audits evaluate how secure an information system that’s owned by a brand or a company is. It measures how well it performs with a set of established criteria. 

There are also many types of security audits, such as:

• Risk assessment audit;
• Vulnerability assessment;
• Penetration test;
• Compliance audit.

Always keeping your security measures in check keeps the Internet scammers at bay. It is important to performing regular audits of your site’s security to scan for malware or other areas that criminals might take advantage of. As well, it’s good to check the security of confidential information to prevent its leakage to criminals.

Monitoring your site on a regular basis can ring alarm bells when suspicious activities get spotted. In turn, this will help you to prevent further loss when online scammers attempt to:

• Manipulate the system;
• Use false information that can cause deception. 

Be sure to keep track of suspicious activities when:

• Billing and shipping information mysteriously changes; 
• Delivery information differs from the physical address of one of your customers.

You can also use tools to help you track IP addresses or anything related to malicious intent.

Address Verification Service (AVS) will:

• Detect transactions that seem suspicious;
• Use a system to prepare countermeasures to prevent fraud.

Because scammers use stolen card information, the risks for disputed transactions increase. This makes for a very undesirable situation for not only the online store sellers but the original cardholder, too. 

To prevent this, the AVS will effectively:

• Traces suspicious activities; 
• Reduce the number of customers who demand refunds.

AVS confirms the billing address that’s been entered by a customer matches the cardholder’s billing address that’s on file with the issuing bank. If the billing information doesn’t match, the system will block purchases from the user. Then it flags the transaction for further investigation.  

Hypertext Transfer Protocol Secure (HTTPS) is a combination of:

• Hypertext Transfer Protocol (HTTP);
• Secure Socket Layer (SSL).

HTTPS is more secure than HTTP. This is essential to send data from a customer’s Internet browser to the online store of the merchant.

To secure private data like client names, locations, and credit or debit card information, HTTPS converts it to code. It stops the leakage of transactions to cybercriminals from your online store. It can also protect the confidential information of the administrators of online shop merchants.  

How can you help to further prevent eCommerce fraud? You can set limits for the number of purchases and total amount of money you are willing to accept from customers in any given day. You can base your threshold on your products and their value. 

This will help you to:

• Keep your customer’s transactions in check;
• Avoid massive damage relating to cybercrime activities regarding your online store. 

As with fraud prevention, IP addresses will help determine whether a purchase is fraudulent or otherwise. 

Carefully check the following, and check twice at the least:

• The customer’s IP address;
• The address on the credit card address.

This can help you spot suspicious activities when both addresses differ.

Keep track of activities in your online marketplace, or even in your own online spending, can help you to prevent eCommerce fraud. As cybercrimes are becoming more common, it’s important to remain vigilant. 

Fraud happens when culprits present false information to swindle their victims. And this can be done through the use of many methods. eCommerce fraud happens because it is far easier than the old and much riskier way of stealing. This provides convenience to fraudsters while staying incognito due to its:

• Ease;
• Anonymity;
• Evasion.

Cybercriminals are clever in their deception to steal information, which is part of the key to the success of their fraudulent acts. This is why both sellers and buyers should watch out for falsified data. Stay watchful by doing the following things.

First, always keep the security of your websites in check, which prevents:

• Criminals from taking away sensitive customer information;
• Your online store from suffering huge losses. 

Second, always stay alert of suspicious activities that arise, such as inconsistencies in:

• Delivery location and/or the customer’s address; 
• The ordered products and amounts. 

Stay on top of the activities of your eCommerce marketplace and be careful with what you do online. eCommerce fraud can be prevented so that you’ll be safe on the World Wide Web.

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