E-commerce is growing all the time. But the Covid-19 virus pandemic has helped to inflate the number of transactions processed by online stores. People are afraid to visit stores in person or their area might be under lockdown. Online shopping is the only avenue left for some folks.
With this explosion in online purchases, there will naturally be a corresponding increase in e-commerce fraud as well. We’ll explore what are the types of e-commerce fraud and how to prevent them.
Why is e-commerce fraud so wide-spread?
If you’ve wondered why is e-commerce fraud so prevalent, we’ll give you the answers below:
- Easy to obtain stolen credit card data nowadays. Fraudsters can buy them in bulk from the dark web for quite cheap.
- Buyer can easily disguise their identify and location thanks to proxy servers.
- Fraud amount is usually below what the authorities might consider worth pursuing.
- Buyer could be in another state or country, making prosecution tough due to jurisdiction.
Types of e-commerce frauds
E-commerce frauds can usually be classified into 2 main types:
- Credit/debit card fraud, a.k.a. card-not-present fraud, where stolen cards are used to make purchases.
- Chargeback fraud, a.k.a. friendly fraud, where the buyer will receive the goods but claimed the item was faulty or wasn’t received.
Strategies to prevent fraud
As an online merchant, there are signs that you can look out for when accepting orders online.
- Pay attention to the shipping address. Check the location of the IP address used to make the purchase. If the location is far from the shipping address, it’s a red flag. Same goes if it’s being shipped to a P.O. Box address or a freight forwarder.
- Orders with large quantities or large amounts should always trigger your fraud radar. It might be a valid order so contact the buyer for verification.
- Buyers making many purchases using different cards are definitely fraudulent.
- Multiple declined cards by the same purchaser usually means a carding attempt.
- Too many purchases within a short period of time is suspicious especially when it’s not the holiday season.
Bonus tip to combat e-commerce fraud
While using the above strategies will help mitigate fraud on your online store, it is time consuming and tedious to perform manually. That’s why we recommend that you utilize the FraudLabs Pro service to automatically screen all of the above and much more. As the number of your transactions grow, you’ll be grateful that your fraud detection can be automated to save you time and money.
Did we mention that there is a free tier in FraudLabs Pro? So, you can get protected today without paying anything. Just sign up for the free Micro plan at https://www.fraudlabspro.com/checkout-micro and leave the fraud checks to us.