What Is Ecommerce Fraud?

An ecommerce fraud happens when a fraudster steals a genuine customer’s data like personal details and payment information to make purchases for himself.

The safety of customer information on ecommerce stores has always been a concern. But with most customers from around the world shopping online after the onset of the coronavirus pandemic safeguarding customer information has become a lot more important but difficult. Ecommerce frauds increased exponentially after lockdowns were imposed.

Common Types Of Ecommerce Fraud

Triangulation Fraud

As the name suggests, triangulation fraud involves three parties. They are the ecommerce store, its customer, and the fraudster. The fraudster creates an online store to sell goods that are high in demand at a very low price. The customer places his order for the goods and uses his credit/debit card to make payments. The fraudster then steals the customer’s credit/debit card information to place his order for the same product with a genuine ecommerce store.

Interception Fraud

Here, the fraudster intercepts a customer’s order with an aim to resell it. He initially places an order using stolen credit/debit card credentials on its owner’s name. And before it is delivered, he contacts either the ecommerce company or directly the courier company and gets the delivery location changed from that of the customer to his desired one.

Chargeback Fraud

Chargeback fraud is where a fraudster tries to order goods without having to pay for them. He places an order, waits for a very long time, and claims to have received the wrong product or to have never placed the order. He then receives a refund for the order and sometimes even a free duplicate of the same item.

Phishing

Fraudsters first send customers emails asking for their login and payment information for an ecommerce website. They use it to hack into customer accounts on these websites and make purchases in their name without their knowledge by changing the login details.

Retail Arbitrage Fraud

Retail arbitrage fraud is where fraudsters use bots to place orders in large quantities for items that are available at a discount with an intention to resell them.

New Account Opening Fraud

This type of fraud happens when a fraudster tries to avail of discounts and other offers by creating a new account using parts of an existing customer’s data. As it involves real data it becomes difficult to detect the fraud.

Promotion/Coupon Fraud

In this kind of fraud, fraudsters try to cheat a business by using their promotional offers multiple times to purchase goods free of cost.

Pagejacking

Pagejacking in ecommerce is the practice of creating a doppelganger of one of the pages of an ecommerce website. For instance, a website’s homepage can be jacked in order to steal the login details of customers.

How To Prevent Ecommerce Fraud?

• Train your customer service executives to identify it, both on a daily basis and during sale seasons
• Get your sales team to conduct manual checks of each order before it is placed instead of automating the process.
• Use a reputed, secure hosting service provider to host the website.
• Ask for customer signatures upon completion of delivery
• Verify the authenticity of a customer’s details by calling, emailing, or messaging them on their social media platforms.
• To protect your customer’s identity avoid asking too many of their details.
• Limit the number of purchases and the amount spent.

Conclusion

Ecommerce customers have to provide sensitive data before making purchases and for them the safety of this data is paramount. Having efficient fraud prevention methods in place is one of the best ways to gain customer trust. Follow the above-mentioned methods to ensure the safety of yourself and your customers from fraud.