The rise of eCommerce has definitely changed the way we shop. No crowded dressing rooms, no parking spot struggles, and a 24/7 open store.
Besides these advantages, there’s a downside worth mentioning. With the rise of eCommerce, fraudulent activities are an even bigger issue than before. In fact, eCommerce fraud has already caused over £13 million in losses in the UK within the first three months of 2023.
The reality is, fraud has existed for a long time, and will most likely continue to. However, there are some trends and effective prevention strategies you can consider to help you protect your business. And you’re going to hear all about it today!
Emerging trends in eCommerce fraud
As much as we try to, it seems like fraudsters always find their way back around. ECommerce is continuing to evolve, and that’s great, but so is the risk of online shopping fraud. That said, let’s take a look at the latest trends in eCommerce fraud.
1. Scams on the rise
First, we have authorised push payment scams, where victims are tricked daily into sending money to criminals. In 2022, according to a report by UK Finance, a steggering amount of over £485.2 million was lost to authorized push payment.
Next, we have identity theft. This has become a huge concern, especially with the rise of eCommerce. As more transactions occur online, fraudsters have more opportunities at exploiting personal information. Don’t get me wrong, there are thousands of secured eCommerce websites. However, criminals stop at nothing to gain your customers’ sensitive information.
Parcel delivery scams are another cause for concern you should be aware of. Let me give you an example. Scammers often pretend to be legitimate shipping carriers and will reach out to you, claiming there’s a problem with the delivery. This gives them room to ask for sensitive information or additional fees in order to fix the issue.
Other scams such as return fraud, phishing scams, and counterfeit product scams are yet another challenges your can deal with in the eCommerce world. But who knows if there’s even an end to this list. With eCommerce continuously growing, new scams are likely to emerge.
2. Chargeback frauds will escalate
The thing is, you also have to keep an eye on your customers too. Sometimes, certain people would try and take advantage of the chargeback process. They’d claim they haven’t received the product or the product isn’t as described. However, their intention is to get a refund or get another product for free.
It seems that there has been a significant increase in chargeback losses over the past years. In fact, between 2021 and 2023 there has been an increase of 10.4%. As you can see, chargeback fraud is becoming more prevalent and you should take steps toward protecting your business from potential financial losses.
3. Payment fraud will evolve
Payment fraud continually evolves in response to technology advancements and changing consumer behaviours. Fraudsters are becoming smarter, and as customers slowly turn to online payments, payment fraud is more likely to keep evolving.
One example of these payment frauds is Card-non-present (CNP) fraud. Sadly, this one is hard to prevent – there’s no physical card or cardholder present during the transaction. And who other than criminals to take advantages of an opportunity such as this one?
4. Account takeover (ATO) fraud
Stealing other people’s accounts has always been a thing. However, with more and more people shopping online, the risk has increased. There are currently between 12-24 million ecommerce websites in the world. Imagine, just how many accounts have been created and are potential targets.
As the number of these accounts increases, it becomes more challenging to protect your customers’ accounts. Here are some of the techniques fraudsters use to gain access to foreign accounts:
- Buying credentials from the Dark Web
- Credential stuffing and Brute-force attacks
- Phishing schemes targeting legitimate customers
Besides these, fraudsters also employ social engineering tactics to manipulate people into giving away sensitive information. Many times, they pretend to be customer support representatives, credit card companies, and email providers. They even go as far as posing as government authorities.
5. Man-in-the-middle (MITM) attacks
You’d all probably agree that nowadays we literally download apps and software for almost everything we need. From social media platforms to entertainment apps, we almost always rely on the digital to fulfill our needs.
There’s a downside to it though. These apps and software have become vulnerable to fraudulent activities. Criminals could just place themselves in the middle between you and your software without you even being aware of it. Needless to say, this puts your personal information at risk, as the attackers would have access to your login credentials, financial data, and even personal conversations.
Prevention strategies for eCommerce fraud
When we first think of fraud, we immediately associate it with scams and think we could never fall for them. However, it can happen to everybody. That’s why you should learn how to recognize and detect fraudulent activities.
This doesn’t mean you lack knowledge or awareness. The thing is, fraudsters are skilled at what they do. It’s their job. Same as yours is to try and timely prevent such events. And today, you’re going to learn how.
1. Account takeover detection tools
Now that you’ve gotten familiar with the increased risk of account takeover fraud, you can take the step toward preventing it. Using an account takeover detection tool is the best way to protect your eCommerce website from such accidents.
These tools are designed to recognize and detect suspicious login attempts. If that were to happen, you’ll receive notifications alerting you about signs of unusual behaviour with yours or any other accounts belonging to your customers.
Worst case scenario, if these fraudulent attempts already took place, you and your account takeover detection tool will be able to take immediate actions to protect the affected accounts.
2. Regularly check your eCommerce platform security
Securing your eCommerce platform isn’t a one-time thing. It requires regular checkups and updates, as fraudsters are literally advancing along with technology. Below listed are some of the activities you can practice:
- If you haven’t already, make sure to implement HTTPS on your website right away.
- Check regularly if the communication between your business and customers’ is encrypted.
- Make sure your online store adheres to the most recent Payment Card Industry Data Security Standard requirements.
- Regularly back up your data.
- Use antivirus solutions to regularly scan your eCommerce website for signs of malicious activities.
It’s clear to me that these are often overlooked. But try your best not to forget if you want to be the proud owner of a highly secured and trustworthy eCommrce website.
3. Authenticate users
This is yet another prevention step that’s crucial for preventing eCommerce fraud. By authenticating your users, you’ll have a clearer picture at who you’re dealing with, and if that person is indeed the legitimate account holder.
Both 2FA (Two-factor authentication) and MFA (multi-factor authentication) do a pretty good job at verifying users. By implementing one, you’re making it harder for fraudsters gain unauthorized access to user accounts.
4. Make CVV numbers mandatory for all credit card transactions
CVVs aren’t found on credit cards by accident. They play a huge role in providing an additional authentication level. Nowadays, customers can’t even proceed with an order if they don’t provide their CVV number.
You should also do the same. Make sure that every transaction requires CVV, so that you can ensure the person behind the transaction is the credit card holder. Not only will this protect your business and customers from eCommerce frauds but also minimized the risk of chargebacks.
5. Establish purchase limits
If you notice multiple purchase attempts, from multiple credit cards, there’s a chance that fraudulent activities might be taking place. This could indicate an attempt to use stolen credit cards to make fraudulent transactions on your eCommerce platform.
Establishing purchase limits is a great way to protect your website from such activities. You can set a limit on the total amount of frequency or purchases and easily detect if there’s an attempt for fraudulent transactions.
Safeguarding your eCommerce business
Sadly, no one is immune to eCommerce fraud. Well, any type of fraud for that matter. Fraudsters are everywhere and will do anything to try and take advantage of unsuspecting individuals or businesses.
We can’t stop them we can’t make them change their ‘’profession’’. However, we can regularly inform ourselves and implement the necessary measures to protect ourselves or our customers from fraudulent activities.
Makedonka Micajkova is a freelance content writer and translator, always bringing creativity and originality to the table. Being multilingual with professional proficiency in English, German and Spanish, it’s needless to say that languages are her biggest passion in life. She is also a skilled communicator, as a result of having three years of experience as a sales representative. You can find her on Linkedin.