This makes it pivotal for eCommerce store owners to become more familiar with fraud trends and the ways in which they can make sure their customers are who they say they are throughout the transaction process. That being said, let’s take a look at several of the most prominent fraud pitfalls in eCommerce worth keeping in mind, as well as the ways to circumvent them going forward.
Alt Payment Channels
The so-called Alternative Payment Methods (APM) have become a popular target for fraudsters looking for ways to inflict damage with eCommerce platforms in recent years. Payment options such as e-wallets, prepaid cards, mobile banking services, and online-only accounts have come under risk of cybersecurity hacks and social engineering theft. Fraudsters have made it a habit to collect data from unsuspecting online users via illicit hyperlinks and fraudulent web pages which store cookie and input information which is then used to make eCommerce orders. The effect of this fraud trend can be minimized by introducing additional confirmations and identity checks to your platform in the shape of email authentication, one-time-use codes, and similar methodologies.
Fraudulent Shipping Returns
Social engineering fraud remains one of the pivotal pitfalls of eCommerce and retail shipping – as is the case with FedEx and similar delivery services. The way FedEx fraud works typically follows a pattern: a fraudster will make an order with an eCommerce platform, wait for the product to be “in transit” and then recall the order or redirect it to a different address. Why is this a problem? It’s because this type of fraud is difficult to detect given the sheer number of individual orders eCommerce businesses have to process on a daily basis. Fraudsters often use stolen card information to order products to the original card owner’s address only to redirect the order to their address during shipping, making it difficult to spot fraudulent behavior. However, with added ID checks, bank account information confirmations and additional info requests from the caller, the fraud trend can be circumvented, if not at least minimized going forward.
FinTech Identity Theft
Account or credit card takeover is what is typically associated with online fraud and remains one of the most damaging fraudulent trends out there. Fraudsters resort to stolen credit cards and online user information to log in and change small details within an individual’s bank account (that’s why it’s referred to as a “takeover”).
Fraudulent Synthetic Identities
If account takeover frauds are difficult to detect early, synthetic identity fraud is impossible to pinpoint before the transaction is made. Synthetic identity fraud consists of a fraudster’s attempt to mix real and fake ID information to essentially create a mimic of an actual person making an eCommerce order. This is done to ensure that their fraud attempt goes by unnoticed long enough for the shipment to go through. As is the case with most fraud trends on our list, synthetic identities can be detected fairly easily once you set up additional verification requirements for individual orders, especially for first-time customers. While it may seem counterintuitive and lead to cart abandonment in some cases, it will significantly reduce the chances of synthetic fraud attempts on your platform.
Buy Online, Pickup In-Store Fraud
Lastly, the so-called BOPIS fraud represents an especially egregious fraudulent behavior attempt that revolves around online orders with physical pickups. Essentially, fraudsters will make website orders which consist of in-store pickups of ordered items – effectively showing up (or sending someone) to your doorstep with an order request. BOPIS frauds can easily be identified by requiring the individual in question to present their personal ID, the credit card used to make the transaction, as well as require them to sign simple paperwork which legally binds them to the transaction, made prior to showing up. Most fraudsters will give up on the order in question to avoid legal charges and you will be able to quickly roll back the transaction and get in touch with the damaged individual whose information was used to make the purchase, further minimizing fraud possibility on your eCommerce platform.
In Conclusion
Now that we have a better understanding of which channels and methods fraudsters use to take advantage of eCommerce platforms, the question remains – what can you do about it? According to Digital Marketing Community, methodologies such as two-step phone authentication (50%), additional card verification numbers (54%) as well as customer order history research (52%) have significantly lowered the fraudulent behavior rates. Fraudsters want to maximize their returns, and that means it’s essential for them to get in, defraud your business and your customers, and get out quickly. Being well-informed about cyber threats, fraud methodologies, as well as digital technologies that offer an added degree of identification and order confirmation prior to the transaction will allow you to stay ahead of the curve and end the fraud attempts committed on your platform in the future.
