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E-commerce fraud is related to commercial transactions that are conducted electronically. These transactions are usually performed from desktops, laptops, tablets and mobile phones.

Therefore, fraud in e-commerce is a criminal fraud carried out during a commercial transaction over the Internet with the aim of financial or personal gain of the fraudster.

Why have e-commerce frauds increased?  #

Payment fraud is mainly popular because the internet itself provides a certain level of anonymity. Scammers don’t have to steal anything physically and risk getting caught. They only need a computer with an internet connection. They can operate from any location at any time.

Online fraudsters usually make fake email accounts that do not reveal true personal information.

In addition, police services do not make fraud in e-commerce a priority, especially when it comes to small amounts. Online fraud is increasingly being carried out across international borders, making it difficult for police to locate and prosecute cyber criminals.

Types of e-commerce fraud #

E-commerce scams are not just stolen credit cards that internet criminals use to buy products online. Here are the five most common e-commerce frauds.

  1. Credit card fraud. Credit card fraud is committed using a credit or debit card. In online credit card fraud, a fraudster uses stolen credit card information to buy products or services from an online merchant.
  2. Chargeback fraud. Chargeback fraud occurs when an online customer buys with their credit card, receives purchased items and then seeks a refund from the issuing bank. 
  3. Hacked account. Logging into social networks is a common way for customers to easily create accounts on e-commerce websites, but it can be devastating if that information is hacked. Cybercriminals may also use bots to steal confidential information, and shoppers could have their identity stolen. 
  4. Interception scam. An interception scam is a fraud method when scammers use stolen credit cards to buy items online, order goods to an address in the credit card record, but then call customer service to change the delivery address before the package is sent.
  5. Triangulation fraud. Triangulation fraud is a slightly more complex method of deceiving online traders in three steps. 
  1. In the first step, criminals create a fake online store, usually offering popular brands at low prices. The site’s only goal is to steal the names, addresses, and credit card numbers from fraudulent customers.
    1. In the second step, the fraudsters use the stolen data to visit a legitimate online store, buy what the victim bought in a fake store and deliver the goods to their home address. 
    2. In the third step, fraudsters use stolen data to buy goods online that they deliver to themselves.

How can retailers recognize e-commerce fraud #

The success of fraud in e-commerce depends on the skill and ingenuity of the fraudster. As online retailers increase their defenses against online criminal activity, cybercriminals also devise cunning ways to defraud their targets. Here are the most common indicators of e-commerce fraud to look out for:

  • Inconsistent order data: The zip code and city do not match. Or the IP address of the shopper, as well as their email address, don’t match. 
  • Larger than standard order: The order is far larger than your consumer normally invests. Various other red flags consist of numerous devices of the same SKU in one order and quickened shipping (the criminal wants to receive the order before getting caught). 
  • Unusual area: Your customer always purchases from an IP address in North America but instantly makes a purchase from an IP address in an unusual place. 
  • Several shipping addresses: The buyer makes multiple acquisitions under one invoicing address but ships the products to several addresses. 
  • Many purchases in a short duration: The scammer makes multiple purchases back to back, and it’s not the holiday season. 
  • Multiple orders from numerous credit cards: Somebody makes several acquisitions using multiple credit cards (either in one day or over a longer period. 
  • Multiple declined transactions straight: The visitor makes not only 1 or 2 wrong attempts when purchasing as ordinary customers would, but try to order many times without entering the correct card’s number, expiration date, and security code.
  • Strings of orders from a brand-new country: You have never received a single order from the Nigeria, and after that, you all of a sudden get many orders in a short period.

Every online retailer should provide its customers with a stable and secure e-commerce platform to withstand hacker attacks. Still, the administrator himself should regularly monitor the situation on the site and detect any suspicious activity by visitors.

Do you want to learn more about e-commerce? Continue reading about → E-commerce software.

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