The fear of COVID-19 has moved people to find solace in their homes. We often come across phrases like stay home, stay safe from the Coronavirus. But what about the fraudsters? They have found a way into your homes as well. Ever since the pandemic started, businesses shifted online to cater to people from their homes.
E-commerce is rapidly being adopted and over the next few years, it is expected to grow even more. However, cybercriminals have not let this opportunity go by. E-commerce fraud is a fraudulent attempt to carry out transactions. It mostly occurs when criminals get unauthorized access to a person’s bank or credit card and then use it to buy things online. There are various types of frauds harming the e-commerce industry.
With this blog, we will dig deeper into the types of e-commerce fraud and what is the best way to fight this fraud.
Emerging E-Commerce Market
Research by Signal Science, sales through the online market is expected to surpass $630 billion this year. The on-store businesses are also shifting towards e-commerce stores operated online. After a successful response in the e-commerce market, the businesses have refused to go back to the brick-to-mortar option.
Businesses are dependent on digital information to keep up with the competitive online market. A report by Forter also points outs the steady rise in the demand for online purchasing and how it affects businesses to reform their businesses strategy.
However, the excitement to gather the maximum number of sales is not free from cybersecurity threats, especially in the retail sector. Retailers operating online are more vulnerable to cyberattacks as they do not have strong identity verification checks and cannot even manually verify the customer.
A report by Signal Science predicts that the fraudsters will cause $12 billion worth of loss in the USA alone by 2020. This is just talking about the direct financial impact of the scam. More loss is followed by the bad repute of the business and poor customer experience.
The Common Types of E-Commerce Fraud
Fraudsters have plenty of tricks up their sleeves to manipulate the consumer and benefit from it. Here are some of the techniques discussed in detail that fraudsters often adopt to initiate financial crime.
True Fraud
This is the most basic type of fraud where the scammer buys the victim’s credit card credentials online through the dark web. The information is then used to buy things from online sites. This type of method is mostly adopted by inexperienced fraudsters.
Interception Fraud
This is the type of fraud where the criminals purchase something online by using a legal credit card. The billing and shipping address of registered with the credit card matches as well so it seems authentic. Once the order has been placed, the fraudster tries to change the shipping address by contacting customer support.
Chargeback Fraud
This is the type of fraud that occurs after the product purchased online has been delivered to the buyer. In this fraud, the customer purchases something and then claims chargeback under identity theft by asking his bank to reverse the transaction. This type of fraud is the hardest to track as legit customers are also involved in it sometimes. This is why the retailers are required to perform identity checks.
How to Prevent E-commerce Frauds?
How that we have learned about the major threat the businesses are facing, what could be the best approach in fighting such frauds? From what we can gather from the discussion above, all the frauds that occurred have been made possible due to inadequate identity checks.
First and foremost, businesses must acquire a robust identity verification service. Due to the rising trend of e-commerce and the rising fraud it faces, the demand for identity verification has also spiked. AI-powered identity verification solutions assist businesses with a fast and secure service that enhances their customer experience.
The document verification ensures that the possible customer the businesses is dealing with is really they say who they are. Additionally, AI-based identity verification solutions also eliminate chargeback fraud by ensuring that online legit customers have access to the credit card.
E-commerce fraud is dependent on unauthorized access to the online business platform. Previously, security measures like passwords or two-factor authentications were used to ensure that only authorized personnel has access. Sophisticated fraudsters have found a way around it and effortlessly hacking online accounts.
In order to keep up with the security requirements, businesses are shifting towards biometric authentication. Biometric is a tried and tested security method that uses a person’s unique physical characteristic, such as their face, to verify their identity. The fraudsters can hack the credentials but they cannot hack the victim’s physical characteristics.
