Fraud in the e-commerce industry has grown at a higher rate than the growth in online sales. According to this disturbing figure, fraudsters will be looking to steal from you and your clients, as well.
Knowing the latest scams technique and how to guard against them is critical if you want to keep your money, reputation, and potential future sales.
Definition Of A Scam In E-commerce
Scammers from all over the world are taking advantage of the huge volume of money that eCommerce generates, with a wide variety of online scams. One thing they all have is their desire to profit illegally or unethically from your business.
If you’re the victim of an eCommerce fraud, it can have long-lasting and severe effects on your business and personal life, including:
- Reducing your revenue;
- Angry your clients;
- Giving you bad reviews
- Tarnishing your company’s reputation; and
- Taking up a lot of your time.
First, you must know what fraud looks like in order to protect yourself from the potentially catastrophic repercussions of a scam.
The Most Common Online Frauds
Many criminals employ a variety of methods to defraud eCommerce businesses of money and merchandise. As a result, we’ve done our best to reduce the list to the most prevalent eCommerce frauds.
- The Takeover Of An Account
A phishing email is the first step in an account takeover fraud, and it tricks your consumers into disclosing their username and password. This can be done by email, or in more creative means, such as a bogus website.
With this information, the fraudster can access a victim’s account, alter the password and shipping address, and then make transactions they don’t have permission to make. This type of fraud might go unreported for a long time because many people merely glance at their bank accounts.
- Theft Of A Person’s Identity
Due to the prevalence of this type of eCommerce scam, stories about identity theft frequently surface. Individuals’ names, addresses and credit card information are stolen by hackers who break into a database.
Another scammer purchases this information and uses it to open new bank accounts to make purchases. You can be both a victim of the initial hacking and a victim of the fraudulent purchases made from your accounts in this scam.
If you’re reading this and picturing a normal rogue criminal, you might want to reconsider. When a customer orders enough things to trigger an affiliate or loyalty reward, they can then use that reward and return the original products for a complete refund.
This can be done by both new and loyal customers. It’s a win for the customer, but a loss for you.
As soon as someone buys something from your store, they subsequently contact their credit card company to lodge a chargeback because the item never arrives. With no confirmation of delivery, the seller gets their money back and you have no money or product to show for your time and effort.
- Fraud On Mobile Devices
Finally, let’s talk about mobile fraud. M-commerce is becoming more popular, and scammers will soon follow. Keeping track of mobile fraud is important in this day and age of e-wallets, payment options, digital money, and one-touch transactions.
- A Bank Transfer Scam
Unscrupulous criminals may stun you with how well they can sneak past your systems if you aren’t vigilant about who you let send you emails. Emails ending in.corn instead of.com are just one example of how your vendors’ real email addresses are being used against you.
How To Avoid Falling Victim To Ecommerce Scams
In the face of all this, it’s hard to imagine a brighter future for your eCommerce company – but it doesn’t have to be. You and your clients can be safe from cybercriminals if you have the correct information and procedures in place.
- Complying With The PCI Data Security Standard
As a result, the Payment Card Industry (PCI) has issued substantial recommendations on the preservation and protection of personal data.
Choosing a platform and apps that guarantee PCI compliance and include secure online checkout, layered security, data encryption technologies, and a PCI scan can help you ensure that your eCommerce platform and systems comply with PCI’s best-practice advice (available here).
- Setting Up Procedures
The likelihood of an eCommerce scammer’s success can be considerably reduced by following certain procedures.
- When making a payment, verifying that the billing address is the same as the billing address is required.
- The use of a three-digit CVV card security code for all purchases
- Mandating passwords that are at least eight characters long; and
- Using two-step authentication, as Amazon does, increase security.
A plan of action should also be drawn up so that you know what to do, who to notify and how to recover fast in the event of a scam.
- Keeping Tabs On Customer Habits
Customers tend to order the same things, spend the same amount of money, and have the same delivery address. Detection programmers can monitor this behaviour and warn you to suspicious activity (such as excessive spending or shipping to a different location) that may indicate a fraudster.
- Use Tracking Numbers At All Times
The more packages you can track, the less likely someone will be able to claim that what they ordered wasn’t delivered.
Initially, this service will cost more than regular delivery, but customers will quickly be prepared to pay more for premium shipping — growing sales and mitigating any financial damage. Using an outsourced fulfilment partner may also result in cheaper tracked deliveries due to the availability of volume shipping savings.
- Payment Method Changes Must Be Confirmed
Wire transfer fraudsters often pose as your suppliers or manufacturers and “update” their bank information to cheat you out of money. Whenever you make a payment method switch, call your manufacturers first to double-check.
- Using Your Errors To Improve Yourself
eCommerce scams can be difficult to detect because of their complexity and intelligence. Learn from your mistakes, understand how it happened and develop additional processes in order to ensure that it doesn’t happen again if a fraudster attacks your internet business.
The Final Thoughts
eCommerce scams are an ugly fact of doing business online, and as technology improves to tackle them, so do the scammers’ tools for devising new ones. Keeping an eye on the newest trends and doing everything you can to avert them from happening and minimize their damage is the greatest thing you can do.