The world of fraud authentications and approvals can seriously impact a business’s revenue. Cybercrime and online fraud are today a challenge for the entire eCommerce ecosystem.
From fake sellers who do not ship the goods once the payment is received, to those who make purchases with stolen credit card numbers from their legitimate owners, online fraud has grown over time, not only in terms of volume but of the complexity of threats and it continues to slow down the development of eCommerce in the world. So, how to catch online fraudsters? Read on to know more.
How threatening is online fraud to your eCommerce online store?
The following eCommerce Fraud Trends statistics can well explain the impact of online threats on eCommerce businesses.
- According to econsumer.gov, an organisation that collaborates, among others, with the Federal Trade Commission and AGCOM, the number of cross-border fraud has increased by more than 200% from 2017 to the end of 2020.
- The losses have reached a whopping $216 million by the end of 2020.
- According to an article published by UK Finance 2021, the annual eCommerce fraud losses on UK-issued debit and credit cards in the UK increased from £28 million in 2002 to £376.5 million in 2020. The highest loss was recorded in 2018 with £393.4 million.
- The UK National Cyber Security Center (NCSC) stated in May 2021 that online scams increased by 15 times during the Covid pandemic time in 2020-21.
- According to Sift’s COVID-19 and E-Commerce Fraud Tracker in 2019 at the beginning of the pandemic, fraud was costing the global economy £3.89 trillion in the UK, and has approximately risen by £130 billion each year.
- The Forter report, found that Buy Online, Pick-up In Store (BOPIS) fraud rose by 55%, money services fraud attacks rose by 65% more, and a 123% increase was seen in identity manipulation, where fraudsters use stolen PII (Personal Data) to conduct attacks.
How can eCommerce avoid online fraud and cybercrime?
Over the years, though the solutions to protect online buyers and sellers against cybercrime have multiplied and evolved still, they are not free from risks. One of the prime reasons is the increasing use of sophisticated tools available to criminals committing illegal acts online.
The COVID pandemic has had a huge negative impact on online fraud statistics. So, how to catch online fraudsters? Read on to know the important ways to prevent online scams.
- It is extremely important to take fraud prevention into consideration right from the beginning while looking at payment processing solutions.
- Make wise and fair choices about payment providers, acquirers, and platforms.
- Look for the best solution for your clients to make sure their business makes the most of these mandatory steps and thrives in the current payment landscape.
- Ensure optimal performance in payment processing, high-security levels for transactions, and a safe and hassle-free check-out experience for their customers.
- Engage in a fraud protection and prevention solution based on artificial intelligence and machine learning that perfectly integrates with the online gateway.
- Reduce the friction points in the payment process to decrease chargebacks and increase conversion rates.
- Pair up with the high-security standards of the payment gateway to increase payment protection for both merchants and their customers.
Types of eCommerce frauds and how can you prevent it?
Due to the COVID-19 pandemic, fraudsters have got the opportunity to take advantage of the new online retail environment, changing consumer spending habits, and the way people are making online payments. It is crucial to understand how online frauds work in order to deceive users and businesses.
1. Voice commerce
Voice commerce is used to serve customers the convenience and speed of asking ‘Alexa’ or ‘Siri’ to complete purchases for them using their voice. But this new technology comes with the risk of fraud. Such shopping is ripe for fraud and other security vulnerabilities. So, retailers should err on the side of caution when using voice commerce.
2. Omnichannel shopping
Engaging customers through multiple channels including social media, by phone and in store, using multiple payment methods and devices is omnichannel shopping. The types of omni-channel fraud include;
- Card-not-present (CNP) fraud.
- Cross-border or cross-channel fraud.
- Click-and-collect fraud.
- Card-testing fraud.
- Return fraud.
- Mobile payment fraud.
If you planning to use an omnichannel approach, look into ways to protect your customer data, accounts, and sensitive financial data. And also protect your physical and digital assets.
3. Dynamic pricing
With Dynamic pricing, retailers can adjust product prices continuously, even within minutes, in response to real-time supply and demand. The fraud-tech-savvy consumers out there can easily use this process for their benefit by logging in from different IP addresses. They can even take advantage of companies whose prices change depending on the location of the buyer.
4. M-Commerce
According to some data, mobile fraud attempts more than doubled from 2018 to 2019. Fraudsters can best fraud with m-commerce as most retailers still haven’t adapted their fraud prevention practices for the smaller screen. Types of mobile commerce fraud could include:
- Using stolen credit and/or debit card details to successfully complete a transaction.
- Gaining access to a customer’s online account and masquerading as the customer.
- Fraud by intentionally utilising the dispute process and getting the money back whilst retaining the goods.
5. Open banking
The new-found convenience comes with complacency such as phishing, which is not only a threat to customers’ bank accounts, but also financial providers.
6. Buy now pay later
Shifting their preferences away from credit cards, GenZ are opting to pay for goods using Buy Now, Pay Later (BNPL) solutions. Fraudsters are using stolen debit and credit card details to create accounts and complete unauthorised online purchases. Merchants must follow best practices and keep themselves a step ahead of such criminals.
7. Smartwatches
Smartwatches streamline the checkout process providing great customer experiences, but they hold a tremendous amount of sensitive personal and financial information which is then passed from device-to-device, device-to-cloud and wrist-to-wrist, putting consumer privacy and security—as well as business data—at risk.
8. Alternative payment methods (APMs)
Today APM’s such as e-wallets and digital wallets are becoming more and more popular due to the rise in mobile commerce. However, fraudsters through APM’s can have access to the credit card information of their victim of fraud.
Key Takeaways
It is absolutely vital to invest in the right resources to investigate the red flags before it’s too late.
- Perform A Security Audit
- Monitor your eCommerce payments activity in real-time
- Set up rules/conditions on your account for added protection.
- Implement a Company-Wide Password Policy
- Set strong, long, and difficult passwords
- Enable two-factor authentication which requires password before they can gain access.
- Understand the Signs of Online Payment Fraud with AI and MI software
- Educate your Employees About Online Fraud
There’s never been more of a need for eCommerce businesses to invest in technology to prevent fraud attacks and protect and fight against such eCommerce frauds. Adobe Commerce helps you to take the necessary precautions to protect yourself with a range of solutions to fit your needs.
References
Ecommerce fraud trends to look out for in 2021. Opayo. (n.d.). Retrieved October 7, 2022, from https://www.opayo.co.uk/blog/ecommerce-fraud-trends-2021
Alessio.damonti@axerve.com. (2022, February 7). How can ecommerce fight online fraud and cybercrime? British Retail Consortium. Retrieved October 7, 2022, from https://brc.org.uk/news/finance/how-can-ecommerce-fight-online-fraud-and-cybercrime
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