Table of Contents
Introduction:
If you own an e-commerce store, you understand how important it is to maintain your online store safe from fraud and scams. To secure your organisation and consumers, vigilant digital security is more critical than ever. Attempts to make fraudulent transactions soared by 69 per cent in 2021 alone in the post-COVID era. If you own an e-commerce store, you understand how important it is to maintain your online store safe from fraud and scams. To secure your organisation and consumers, vigilant digital security is more critical than ever.
Your fears are correct: online fraud is on the rise. A roughly 30 per cent increase, to be precise, according to a LexisNexis Risk Solutions year-over-year analysis. To make matters worse, online merchants must combat fraud on two fronts. For starters, you must protect yourself from methods that explicitly target merchants, such as false chargebacks or site copying (see below).
But, on top of that, you must protect your consumers from scammers. Scammers on your website are a sure way to kill an online store, even if you’re a victim like your customers. Fortunately, e-commerce fraud protection is on the rise, with tactics as sophisticated as the scams they foil. In this post, we will discuss what are online store scams and the most prevalent e-commerce fraud schemes.
What are online store scams?
Simply put, an online scam occurs when someone defrauds you or your organisation on the internet. They are typically facilitated by cybercriminals and can range from credit card fraud to identity theft. Online scams have been around for a long time, but their prevalence has increased as a result of the increase in online transactions as a result of COVID-19.
Many of the con jobs on this list, whether online or not, have been around for a long time in some form or another. Most online scams that people fall for nowadays are simply modernised versions of rip-offs that everyone has heard of. We’ve seen chain letters, fraudulent invoices, vanity scams, and overpayment frauds before. However, the Internet has given them a new life, massively expanding their reach and making them much more dangerous.
An internet scam can affect everyone, but small businesses are especially vulnerable. Startup businesses frequently lack the security of established businesses, and staff may not be as well trained to avoid scams. Overworked, struggling business owners frequently seek assistance in enhancing their websites and marketing efforts, and scammers are only too happy to “assist.” Scammers also target people trying to start small enterprises by promising large sums of money for a small bit of effort.
What are the most prevalent e-commerce scams that put online stores at risk?
While there are many scams out there. The trick is determining who is genuine – keep reading to find out who to believe and who to avoid like the plague. Knowing is your first line of defence against e-commerce fraud. Below are the most common type of e-commerce frauds your online store can be susceptible to:
1. Email phishing scam:
Every day, it seems like a new email fraud emerges. Phishing emails look to be sent by a legitimate sender, but they are designed to obtain sensitive information from the recipient.
You may have gotten an email or text message informing you that your company’s account has been compromised. By clicking on the link, you may expose yourself vulnerable to hackers who may target personal and commercial information. Before opening attachments or clicking on links, make sure you trust the sender.
Business owners should be aware that scammers are becoming more creative in their delivery by disguising themselves as real brands. By keeping your firewall and anti-virus software up to date, you can avoid getting phishing emails.
2. CNP (Card-Not-Present) Fraud:
This type of fraud occurs when a scammer uses a stolen credit card, a consumer’s identity, or banking card information. A CNP often follows the procedure outlined below:
- The scammer uses a stolen credit card to make an internet purchase.
- The purchase is approved by the issuing bank, and the items are delivered to the scammer. The cardholder does not recognise the purchase and requests a chargeback from the credit card company.
- In exchange, the store must reimburse the legitimate owner of a card and incur a loss. In the worst-case scenario, your store could be punished and blacklisted.
Advanced authorisation tools, such as multi-step authorization or tokenization, can help your store protect itself from CNP fraud.
3. Friendly fraud:
Don’t be deceived by the name; this type of scam is far from nice. It occurs when a customer files a chargeback with their credit card company after having paid for and received their merchandise.
Sometimes it’s an honest mistake on the part of the client, such as when they don’t recognise the name of the store on their credit card statements. However, there are situations when friendly fraud is committed with malice. Some clients will go so far as to hire professional refunders who will denounce fraud and get their money back in exchange for a fee.
Friendly fraud is becoming more prevalent. Furthermore, if you do not keep precise records, you may be liable for any fees and penalties associated with chargebacks.
4. Identity theft:
What happens if someone’s account information is stolen as a result of a phishing email? Guess who pays the bill when the scammer gets that information and buys a lot of pricey items for themself. Identity theft is when someone pretends to be someone else and uses their financial information to make purchases.
As strange as it may seem, the store is generally the one that suffers the most as a result of identity theft: credit card companies typically begin chargebacks on behalf of the victim, but they are under no duty to refund the product. Even if the shop can reclaim the merchandise, it is no longer new. The only way for a store to avoid being a victim of identity theft is to prevent it from happening in the first place.
It’s also worth noting that internet retailers must be wary of unwittingly becoming partners in identity theft. Hackers can take your clients’ information from right under your nose if your site isn’t secure.
5. Account take over:
This year, fraud involving account takeovers (ATOs) is on the rise. Scammers hack into vulnerable accounts for around 22% of adults in the United States. These cyber thieves exploit the stolen data to carry out illicit transactions, which can have a significant negative impact on your business.
As cyber fraudsters grow more inventive with their methods, we should expect ATO fraud cases to continue to rise in 2022. This form of fraud is now easier than ever before because of automated approaches such as scriptwriting.
You may safeguard your consumers from ATO fraud as a merchant by requiring two-step authorization or biometric passwords before they finish their transactions.
Conclusion:
Your fraud prevention safety measures immediately improve — or, more properly, your failure to prevent fraud schemes directly impedes — the success of your online brand. With e-commerce fraud on the rise, online retailers are placing a greater emphasis on security than ever before. We here at Security Pilgrim are to assist in setting up a robust and safe security system for your online store to protect you from e-commerce scams.
