The growth of the e-commerce industry has been met with a corresponding increase in e-commerce fraud. A report states that online retailers have to survive around 206,000 fraudulent attacks on their online stores each month. How huge! In 2016 alone, online fraud increased by a whopping 33%.
Because of these incessant attacks, it’s become only natural that every online store owner puts measures in place to contain this. This article seeks to address what e-commerce fraud is. Commonly asked questions like how is e-commerce fraud detected, and how fraud orders can be avoided will also be treated.
What is E-commerce fraud?
E-commerce fraud also known as purchase or payment fraud is used to describe an illegal or false transaction made over the Internet as payment for goods and services.
Simply put, it is a false representation of the fact. Typically, the vendor gets no compensation for the received goods or is paid way less than the value of these goods. This is usually done using a fake credit card.
However, e-commerce fraud isn’t limited to purchasing goods with fake or stolen cards alone. It may come in different forms. Affiliate fraud advertising, identity theft, triangulation fraud, phishing, re-shipping, and card testing are the other types of e-commerce fraud these fraudsters tend to explore.
To guide against this, vendors have to put up walls upon walls of security measures. But before building these layers of extra protection, they must get the basics right.
Some of these basics include setting strong password requirements, following payment card industry (PCI) standards, and using a solid verification system.
Identifying online fraud and the way it is being perpetrated in today’s world is also key to figuring out how to seal these security loopholes.
How do you identify E-commerce fraud?
How is fraud most commonly detected? How do you know if you’re getting scammed? Here’s how.
Online fraud can take different forms, most of which have been earlier highlighted. Transactions containing some of the signs listed below are likely to be fraudulent.
There may be nothing to worry about if a few of these signs are evident in an order request. However, you might have to do a little more digging if the transaction is riddled with a lot of these signs. Here, they are:
Larger-than-average orders: Nearly all online vendors would jump at fulfilling very large orders – because large orders mean more money. But should that be the case? No! Stolen credit cards have a very short life span. Hence, most fraudsters would try to maximise their spending in one or two transactions. Fulfilling this kind of order would be short-changing yourself in the long run.
Fast shipping: As far as shipping goes, most customers opt for the less expensive option albeit with slower delivery. But since money isn’t a source of worry for these fraudsters, they are likely to choose the faster and more expensive option that will get them their purchases before the credit card is flagged as stolen.
Large quantity of the same product: This should be treated the same way with very big orders.
Unusual location: This is one of the biggest signs of potential fraud. You should double-check orders you get from countries with high fraud cases. You should also be wary of fulfilling orders from countries you usually do not get orders from.
Other fraudulent signs to be wary of include:
- Multiple shipping addresses
- Multiple card orders, all from the same IP address
- Poor punctuation and capitalization
- First-time shoppers
- Shipping or billing address that does not resonate with the IP address
How do online merchants typically protect customers?
Here’s a sad truth. No matter how heavily guarded a system is, it isn’t foolproof. Your store is no exception to the rule. However, putting the following measures in place would make your system more secure and difficult for any fraudster to circumvent.
Keep the platform and software up to date: The technicalities of running an e-commerce store cannot be compared to that of running a personal blog. For the latter, you can afford to run an older software version. However, the same cannot be said of an e-commerce store.
For maximum security, it is recommended that you run the latest host version for your e-commerce platform. This is because each version attempts to address the security loopholes in the previous version. Therefore, a new version has incorporated in it all that is needed to tackle recent fraud techniques.
Use HTTPS on all checkout pages: HTTPS is the recommended transfer protocol for platforms that deal with payment transactions. This is because it is more reliable for conveying confidential information like the name of the buyer and card details from the buyer’s browser to the server. It is a good solution to phishing attacks.
Get fraud protection software: The basic security solutions like using HTTPS on all your web pages and setting high password requirements will only help you get past amateur fraud attacks. You need fraud protection software to tackle more organized fraudulent attacks.
Fraud protection software is well-designed and optimized to detect high-risk transactions and reduce fraudulent attacks on your online store to a bare minimum.
For best results, hop on one that offers a sophisticated blend of human analysis and machine learning in analyzing fraud risks. It is advantageous on the side of the vendor owner to also use a solution with chargeback protection. These solutions usually cover a fraction of the losses a business incurs due to fraudulent activities.
AVS and CVV: Using AVS, an acronym for Address Verification Service and CVV, short for Credit Code Verification can save you a lot of trouble. AVS ensures that the building address with the credit card company matches the billing address of the purchase. That is, an order to India with a credit card whose registered billing address is Illinois, USA is unlikely to go through.
CVV on the other hand is a three-digit number printed on credit cards. It is usually not stored in databases and hence cannot be sourced through data attacks. So, a customer must have physical access to a credit card before they can have the credit card’s CVV. Requesting for a CVV before purchase validation eliminates purchases made with stolen credit card information obtained from phishing and database attacks.
Buyers and online customers should only patronize stores that have them in mind and have put up measures to ensure the safety of their information online. Daalder is one such. Its clean interface, well responsive pages are only a fraction of its enviable features.
How Security-Oriented is Daalder?
HTTPS authentication: Unlike some platforms, Daalder uses the more secure HTTPS protocol on our web pages, ensuring the safety of our customers’ transactions.
Transport Layer Security (TLS) and Secure Sockets Layer (SSL): TLS and SSL certifications also help to authenticate transactions as well as encrypt transactions done on the website.
Omnipay: This payment processing library allows users to use their favourite payment gateway providers on our platform. So, users have nothing to worry about if they do not want to reveal sensitive financial information to your e-commerce store. You can use your favourite payment gateway with the platform.
ISO-certified: Daalder is certified by the International Organization for Standardization (ISO). This body creates a set of guidelines that guide businesses into making sure their processes are standard. Being ISO-certified means that Daalder’s processes are in tune with world standards. It also means that we have high data security, risk-aversion strategies, and first-class management systems.Payment Card Industry Data Security Standard (PCI-DSS): It is customary for every platform that manages credit card transactions to comply with the requirements put forward by PCI-DSS. Daalder does this well to ensure the safety of all its users’ credit card information.
