Online thefts are pretty well known to stores. Even though online stores don’t work like regular stores, fraudsters still try to steal from them. Due to the fact that e-commerce fraud is getting worse, it is more important than ever to learn how to spot and stop it.
So, in this guide, we’ll talk about six different ways to avoid e-commerce fraud and stay safe online.
So, let’s start:
What is fraud in online shopping?
E-commerce fraud is a type of online fraud that usually happens on sites where people buy and sell things. There are different kinds of fraud in e-commerce. Most of the time, these types are:
- Using a fake name or number
- Using a fake or stolen credit card to buy something
- Fraud in advertising, affiliate fraud, and more.
When someone commits fraud on your e-commerce store, you, as the store owner, have to pay for it. As a result, this will hurt your overall income.
E-commerce frauds usually involve the wrong credit card or personal information, which is different from frauds that happen in real stores. This is more true when you can buy something online without having to have your credit card with you.
In some cases, hackers get into private information and sell it on the black market. Usually, this kind of e-commerce fraud is very bad. But there are also a few other kinds of fraud. People often call this “friendly e-commerce fraud.” In this kind of e-commerce fraud, a customer files for a chargeback on purpose to get a free product or get out of paying for anything.
Since e-commerce fraud cases are rarely brought to court, these are so common right now. This is more true for a number of reasons, such as:
How long it takes to find and prove e-commerce fraud
Limits on resources
Having trouble gathering evidence, etc.
So, the best thing to do is to learn how to spot fraud quickly and how to avoid it.
How can you spot fraud in online shopping?
- Fraud in online shopping can take many different forms. Some of these are taking over someone else’s account, testing a card, friendly fraud, and many others.
- In the US alone, online payment fraud is expected to cause about $20 billion in e-commerce losses in 2021.
- E-commerce fraud is also more likely to happen in Asian-Pacific countries. About 4% of the brand’s total sales are lost because of the region.
- This never means that fraud can’t happen in other parts of the world. So, it’s time to learn how to spot e-commerce fraud effectively:
- Online shoplifters usually buy expensive things because the money they spend isn’t theirs.
- Most of the time, fraudsters place small orders to see if their stolen cards still work. So, you should just know about these.
- If a customer buys different things with different credit cards, you should be very suspicious.
When someone buys something with a card that was stolen, they won’t be able to give enough information. This will make the payment not go through. So, if a customer’s payment keeps getting turned down, this is a red flag.
If you get a lot of orders from a suspicious IP address, this is another clear sign that something is wrong. For example, if your store is in the United States but you keep getting orders for expensive items from an Indonesian IP address, this could be a sign of fraud.
How to Stop Fraud in Online Shopping?
Fraud prevention in e-commerce is now a must. About 10% of a company’s income goes to finding and stopping e-commerce fraud. If you want to stay safe from e-commerce fraud, you need to know the best ways to avoid it.
So, let’s start:
Look over your risky orders by hand.
Even though software for online shopping can flag a risky order. But you can raise a red flag if you look over risky orders by hand. If you’re not sure if an order is real, you can double check by calling the customer. You can see if an order is fake by looking at the IP address, location, number of items ordered, and other things.
Do security audits of your site often.
The security systems of e-commerce stores need to be checked for flaws. Do this before a con artist or criminal does. You can do this by checking the security of your site often. More frequent security checks on sites are usually done to make sure:
- Plug-ins and shopping cart software have been updated
- SSL certificate was checked.
- How often you back up
- PCI-DSS conformity
- Protection against malware, and more.
- Limit the number of items you order
If someone orders a lot of expensive items or a lot of them, this is a clear red flag for you. This means that someone is making purchases from your e-commerce store with someone else’s credit card.
You must make sure this doesn’t happen at your online store by putting a limit on the number of items someone can buy at once.
You should look at how much your business sold in the past to set a normal order limit for your store. This limit should be based on how many items your store sells on average every day.
Make sure you comply with PCI
To make sure that online payment processing is safe, all e-commerce businesses must be PCI compliant. This regulation makes sure that sensitive information about cardholders doesn’t get out because of credit card fraud.
If you use a SaaS e-commerce platform, this compliance is taken care of automatically.
Get proof that the order was delivered.
One of the most common types of e-commerce fraud is return fraud. When a customer says he hasn’t gotten his order, this is what happens. You can solve this problem by getting proof of delivery. So, customers will say this if they haven’t gotten their delivery.
To do this, you need to work with reliable shipping companies that can give you a proof of delivery quickly.
IP fraud scoring tools should be used.
Using the same computer, one person can pull off different types of e-commerce fraud. Using IP fraud scoring tools can be a good way to find these people. These tools work well and can help you quickly find an IP address that has been used for fraud in the past.
Different signals, like location, VPN status, type of ISP, etc., are used by these tools. So, you can find out which IPs have high fraud scores.
One Last Thing
E-commerce scams are hard to pull off. People who try to do these things are smart and always come up with new ideas. But if you take precautions, you can keep yourself safe from these things.