The rise of eCommerce has led to an increase in criminal activity, but there are ways you can protect your business from eCommerce fraud.
There are many types of fraud that eCommerce businesses face. The most common form of eCommerce fraud occurs when a criminal obtains stolen payment card information and uses it to complete an unauthorized transaction without the account owner’s knowledge. The fraudster may have physical possession of the card or acquired the card data electronically. Once the transaction is complete and the payment is approved, the business remains responsible for ensuring that the cardholder was who they said they were in the event the legitimate cardholder disputes the transaction. This puts the task of preventing fraud on the merchant. While card issuers and merchant services providers provide solutions to prevent eCommerce fraud, criminals quickly evolve to more elaborate schemes. Understanding the types of fraud and how they can be spotted is the first step in protecting your business.
Cyber-criminals are resourceful. There are many ways to commit eCommerce fraud, and new techniques are created daily. However, most fraud will fit into one of five different categories: true fraud, friendly fraud, phishing, refund fraud, and card testing.
Merchants must be proactive in anticipating and preventing fraudulent transactions. The fraud prevention tips below will help lower the costs associated with fraud and protect your business from larger, more expensive fraud losses in the future.