What is Fraud?
The word is of French origin and means fraud in Turkish. It is deception during an online commercial transaction that adversely affects the seller's profits for the financial or personal gain of the fraudster. Types of fraud include tax fraud, credit card fraud, wire fraud, securities fraud and bankruptcy fraud. In this article, we will talk about E-Commerce fraud, which is one of the most common types we encounter. Let's take a look at the most common types of ecommerce scams and how they can be combated. E-commerce fraud can take many forms, including account takeover, card swiping fraud, and more. To reduce the impact of ecommerce fraud on your store, you need to understand the specific type of fraud and its source. If you own an e-commerce store, you should be protecting your customers and your business from potential e-commerce fraud. Recently, e-commerce fraud has increased almost twice as fast as e-commerce sales. You need to use fraud management systems that help you manage chargeback disputes and detect and protect against fraud. We have compiled a list of the most common types of ecommerce fraud that you can use to protect your store from fraud when shopping online.
What is e-commerce fraud? Fraud Transactions in E-Commerce E-commerce fraud is any type of fraud that occurs on an online shopping platform. Using a stolen or fake credit card, using a fake identity, and similar types are forms of e-commerce fraud. When a user commits fraud on your online shopping store, you, as the seller, bear the cost and your revenue is negatively affected. In the first half of 2019, there were at least 23 million stolen credit cards sold on the dark web.
Types of E-Commerce Fraud When you hear the term e-commerce fraud, you probably think of stolen credit cards that criminals use to purchase items from online stores. But credit card fraud is just one of the most common types of fraud.
Credit Card Fraud Credit card fraud is the general term used for fraud committed using a credit card or debit card. In online credit card fraud transactions, the fraudster uses stolen/fake credit card information to purchase products or services from a web merchant. In the most common scenario, the fraudster visits a site that sells credit cards on the dark web. From here it purchases card data. Visits an online store using the stolen card number to purchase a product or service. This first transaction defrauds the cardholder whose card has been stolen. But at the end of the day, he is defrauding the store owner, who must refund the purchase. Because the real card owner can file a chargeback to the bank that issued the card. If the bank completes the investigations and finds it justified, it passes the payment to the card holder.
Account Takeover
Account takeover is often referred to as a form of identity theft or identity fraud. This method occurs when a person accesses their login credentials to steal money or information. Fraudsters digitally break into a financial bank account to gain control and have a variety of techniques at their disposal to achieve this, including phishing, malware and man-in-the-middle attacks. Fraudsters look for opportunities to take over important accounts such as banks, credit cards and e-commerce. Some account takeovers begin with scammers harvesting personal information from data breaches or purchasing it on the Dark Web. Personal information such as email addresses, passwords, credit card numbers, and social security numbers collected are valuable to cyber thieves for financial gain.
Triangulation Fraud Triangulation fraud requires three different types of actors. These are the fraudster, the shopper, and the e-commerce store. The fraudster sets up a store selling high-demand products at competitive prices. The scammer puts together an eye-catching sales listing, usually at a fairly affordable price. Product prices are interpreted by the customer as an opportunity not to be missed. Customers who think they will benefit from this attractive opportunity enter their card information and make the purchase. The fraudster receives the payment and also has the recipient card information. The fraudster buys products from the real seller with the captured card information. It arranges the delivery using the address information specified by the primary card holder during the purchase. The legal seller initiates the delivery process for the incoming order request to arrive. The cycle occurs when the cardholder notices the transactions taking place on the account statement. The cardholder disputes the charges, resulting in the legitimate merchant facing a chargeback.
How to Prevent E-Commerce Fraud? In online shopping processes, these methods seriously damage the profitability of stores. The variety of fraud transactions may seem difficult to protect your e-commerce business. We have listed solutions for you that will reduce the risks against fraud.
Fraud Detection Solutions This step is one of the effective ways to fight against all kinds of e-commerce scams. This service is a third-party solution that specializes in card testing fraud, chargeback and other fraud transactions. A fraud detection solution is useful for e-commerce organizations of all sizes. And it's one of the best ways to protect against fraud for e-commerce businesses.
Maintain PCI Compliance The Payment Card Industry Data Security Standard (PCI DDS) ensures that companies that store and process credit card information and cardholder information (such as e-commerce companies) provide a secure environment. PCI compliance creates a firewall between your internet connection and any system that stores credit card numbers. As a result, PCI compliance is mandatory. Therefore, you must ensure that you comply with the relevant PCI guidelines to avoid any sanctions or penalties.
Be Extra Careful During Holiday and Campaign Periods It is useful to be cautious on days when important opportunities and periodic campaigns increase. During these periods, customers pay less attention to security measures due to seizing opportunities. The truth is that many scammers take advantage of the intensity of this period, counting on it to become harder to detect. Therefore, the increase in transactions compared to the normal period will require more attention.
You can start using Netahsilat, an online collection system that is 3D Secure compatible, has international PCI DSS security standards, can operate in multiple currencies and in multiple languages, today.
As e-commerce constantly changes, so do e-commerce fraud methods. Account takeover attacks are expected to increase in the near future due to numerous high-profile data breaches. Scammers often use bots to conduct such transactions on a larger scale. You need to be more prepared for these processes every day. Don't worry, as technology develops, it becomes easier to detect and block these methods. The developments provided by algorithmic and behavioral approaches to fraud detection are increasing day by day. This means e-commerce companies will be better equipped to fight against fraudsters. Predictive and behavioral models powered by machine learning have evolved. These help e-commerce companies better combat fraud attempts today. To defend yourself against malicious users, you can use a high-quality solution that includes a fraud detection and management system. If you follow e-commerce fraud prevention methods closely, you can stop most scammers with your own methods.
