Many businesses are recognizing the incredible potential that comes with selling products online. From offering competitive pricing and one-day shipping to reaching nearly unlimited potential customers, there are many advantages.
However, e-commerce operations and ecommerce fulfillment solutions often pose a few risks. Recognizing and preventing situations that could lead to e-commerce fraud is vital to having a successful business. In this guide, we will discuss how to prevent e-commerce fraud so that you can create a safe and secure online shopping experience for your customers.
What is E-Commerce Fraud?
E-Commerce fraud is any type of malicious action on an online platform. It can often take many forms, such as assuming a false identity or using a fake credit card to purchase items. Hackers often steal vulnerable information, such as your bank account and social security numbers, and then sell it on the black market. They usually don’t even need a physical credit card to conduct these fraudulent transactions. These transactions are becoming increasingly common place, especially since there isn’t a formal system for prosecutions.
However, e-commerce retailers typically get an average of 206,000 cyber attacks monthly, with successful fraud attempts rising to 48%. Hackers are using more sophisticated tools and tactics to undo your security and steal confidential information. As an e-commerce merchant, you need to protect your online business to safeguard your customer’s personal information. Before we learn how to prevent e-commerce fraud, we will first learn how to identify the mostcommon types.
Four Types of E-Commerce Fraud
Card Theft
This is perhaps the most well-known type of e-commerce fraud. Card theft is when the hacker uses a stolen credit card to make purchases or other fraudulent transactions. If you have noticed that your card is missing or the new card has never arrived, you need to notify the issuer immediately. The issuer will then safeguard your account so that no fraudulent purchases can be made.
Friendly Fraud
This type of fraud is not very friendly, despite its name. The customer will use their credit card to make a purchase. They will then call the retailer for a refund after claiming the product was damaged or never delivered. They will then request that the funds be returned to another credit card. Always issue the funds back to the original payment method to prevent friendly fraud.
Account Takeover
Also frequently known as impersonation scams, this is when ahacker breaks into your account. The hacker might contact your card issuer to obtain personal information such as PINs, passwords, mailing addresses, and other sensitive data. They will then be able to gain access to your account and could even lock you out. Depending on how frequently you use your account, thisfraud might take a while to notice and resolve. Some credit card companies actively try to prevent this theft by requiring verbal passwords before giving away any sensitive data.
Triangulation Fraud
A triangulation fraud involves three people. First, the scammer will set up a fake store front to accept orders. Then, the buyer will receive the item as if it is a regular transaction; they will likely never know they were scammed. However, scammers now have access to their credit card information and other personal data. If you receive an item from a merchant that you did not order from, or your credit card has a charge that you did not make, your credit card information might have been stolen.
10 Important Steps to Prevent E-Commerce Fraud
Conduct Regular Security Audits
One important way to ensure that your e-commerce store is assecure as possible to protect against unwanted online invaders is by performing regular security audits. Use the following as a checklist the next time you complete a security audit:
● Update your security software and plugins
● Scan your website regularly for malware
● Use strong passwords for all admin accounts and hosting dashboards
● Don’t forget to change your passwords regularly – set are minder on your phone
● Back up your online store and remove any inactive plugins
● Make sure that your store is PCI-DSScompliant (Payment Card Industry Data Security Standard)
● Encrypt all data and communication between store,customers, and suppliers
Invest in Hypertext Transfer Protocol Secure(HTTPS)
HTTP is used to exchange information between your online store and customers between a web browser. HTTPS can make this interaction secure. What happens is that HTTPS encrypts data to protect sensitive information such as names, addresses, and credit card numbers. HTTPS will protect your transactions so hackers and other online invaders won’t have access. You can get HTTPS by purchasing an SSL or TSL certificate.
Raise Awareness of Potential Security Issues
Educating your team members on potential security issues is keyto fraud prevention. In addition, teach your team to be able to recognize certain patterns of behavior that could be indicative of fraud.
Require Customers To Set up an Account With You
Making the account setup process as quick as possible isessential to positive customer experiences. However, there might be times when requiring additional information can help verify the customer's identity.
Ask for Card Verification Value (CVV) Numbers
Always ask the customer for the three-digit code on the back oftheir credit card. The CVV number is one indicator that the card belongs to the customer.
Use Tracking Numbers for All Orders
Unfortunately, sometimes things can happen to online orders,such as getting lost in the mail or even package theft. Always issue a tracking number for every order. This ensures you and your customer can track the order from initial shipping to final delivery.
Look at IP and Email Addresses
Another way you can verify customers' location is by checking IP addresses. If a customer says they are in one city, but the IP address says otherwise, you could request additional details. You also need to check email addresses. By looking at certain parameters, you can find out if the email
address could be potentially fraudulent.
Check Billing and Shipping Addresses Too
Always verify the billing and shipping addresses of the customer. If the billing and shipping addresses differ, it could point to a case needing further investigation.
Request a Signature for Certain High-value Items
To ensure that an item gets delivered to the customer, always request a signature to ensure they have received it.
Track Customer Buying Behavior To Prevent Suspicious Activity
Customers usually adopt certain buying patterns. If the pattern deviates from the norm, you could escalate it to the IT team for further investigation. For example, if the customer suddenly purchases multiple items after a period of no buying activity, it could be a cause for concern. Track customer buying behavior to be able to prevent any suspicious activity.
Wrapping Up
Knowing howto prevent e-commerce fraud is essential to having a secure and safe online business. By taking these steps, you can put your best foot forward as you transition into the exciting world of e-commerce with e-commerce fulfillment and reverse logistic companies.
Victory Lane Solutions (VLS) can help you with all your e-commerce and 3pl ecommerce fulfillment needs. From day one, we will work directly with you to build strong partnerships and trust to guarantee a less than 1% shrinkage target. Work with us, and we can help you skyrocket your business.
