The State of Fraudulent eCommerce; this is what you need to know
With an increasingly digitised world, more than ever, it is now crucial you protect your business assets from the rising risks posed by online fraud.
eCommerce fraud – A definition
Many definitions describing what is eCommerce fraud exist. However, the universally accepted definition, according to the Printful Blog, dedicated to the world of eCommerce, online commercial fraud arises when an individual uses a false/stolen identification to acquire your goods online.
Whilst this may seem far fetched, eCommerce fraud is a rampant and recurring problem in today’s society posing a major risk to your business; according to the Association of Certified Fraud Examiners, one figure states that up to 50% of all online startups and small to medium-sized enterprises will find themselves facing some form of fraudulent activity, at cost of a whopping $114,000 (USD) per annum. Do you want to be part of that metric?
Unfortunately, should you be targeted for fraud, accepting (whether knowingly or not) a fraudulent payment will possibly result in you burdening the financial loss?
Other online activities also bring risk to you and your enterprise. This includes hacking and phishing plots, which is worth reading upon. More information may be found here:
- What is phishing? By Cs, Online divulges in a great deal what phishing is, and how to counter it on an organizational level
- What are an Organization’s Concerns on Computer Hackers? Chron discusses in great detail the concern enterprises have over the risk imposed by hacking groups.
Table of contents
- eCommerce fraud – A definition
- Present Day Statistics around Online Commercial Fraud
- The many forms of Online Commercial Fraud
- 6 proven methods to defend yourself against online commercial fraud
- 1: Track transactions and adequately compare bank accounts daily
- 2: Compulsory Card Verification Value (CVV)
- 3: Contemplate implementation of limits
- 4: Utilisation of the Address Verification System (AVS)
- 5: Tighten up your Password Requirements
- 6: Continuously update, upgrade, and manage your software
- Payment Card Industry and the Online Payment Principle
Present Day Statistics around Online Commercial Fraud
To show you how pervasive of an issue this presents to our society, lets share a few of the following statistics…
- Annually, the increasing number of credit card cashbacks rise by 20%, equating to $24 Billion (USD) losses in 2018 alone.
- The USA holds title the greatest percentage of credit card fraud at 38.6%
- 30% was the growing rate of online consumer fraud in 2017
- 2017 also saw 16.7 Million Americans targeted by identity theft; this total damages arising to more than $16 Billion (USD)
- No industry is left unmarked by online fraud, evident how numerous sectors lost over $57.8 Billion USD in one year alone.
The many forms of Online Commercial Fraud
Plainly, ID theft is when an individual’s credentials are taken from them. 2018 saw more than 450 million records of personal information compromised and illegally acquired.
When people claim to be somebody that they are not, this is known as phishing and is a major practice used to allure you into a false sense of trust. This is often achieved through the theft of another individual’s accounts and login credentials.
For some online commercial businesses, for every single dollar they make, they can subsequently lose $3.94 as a result of a chargeback. This usually occurs within 60 days of purchase for 40% of the customers who utilise this tactic.
This comes about from a lack of patience from the consumer to get reimbursed by your online retailer from which they found the item.
Disputify is a great tool that you should use in combating fraudulent cashbacks. it works by monitoring the consumers and prevents those who wish to perform an illegal chargeback from acquiring your products free of charge.
This makes reference to the actions undertaken by scammers who illegally acquire your goods through a false home address they’ve found online.
Often as a result of identity theft, scammers will utilise the victim’s address to purchase products from you online.
It must be noted that this commonly occurs around heavily commercial periods such as Christmas, Black Friday and other online retail events. Over the years, Billing Fraud around these periods may cost you thousands. This begs the question, are there any means by which you can defend your online commercial interests against fraud?
6 proven methods to defend yourself against online commercial fraud
There are a number of methods that you should use to mitigate implications brought upon by eCommerce fraud. Adopting a hybrid approach to the following techniques will help to grant your business a shield against those who wish to cause harm.
1: Track transactions and adequately compare bank accounts daily
It is essential that you monitor your eCommerce affairs. Frequently checking your transaction records and accounts, enables greater detection of fraudulent activity that has taken place. These inconsistencies could be shipping information, addresses, identities, or billing information. You should use applications and software to monitor the online address of individuals, and spot those that are ‘known’ for fraudulent acts.
The aforementioned tool is known as IPAM Software. This software lets you keep a log of all the IP addresses that have been on your network, interpreting their respective DHCP and DNS location details. Plenty of applications exist for this purpose, these include SolarWinds IP Address Scanner, BlueCat IPAM, LightMesh IPAM, as well as many more not mentioned.
On top of this, it is also worth mentioning that you should watch out for suspect credentials, such as emails; Occasionally these may also belong to individuals/organisations wishing to conduct fraud.
2: Compulsory Card Verification Value (CVV)
The CVV is the 3-digit code placed on the back of the card. Payment Card Industry (PCI) rules make it illegal for any retention of this code. This is what makes the method so successful; Unless the fraudster has swindled a card from another individual, they will not have the ability to acquire items requiring the CVV code. You should utilise a CVV gateway somewhere in the checkout procedure to prevent a large number of fraudsters from making successful transactions.
3: Contemplate implementation of limits
Whilst this may appear to be a self-inflicted handicap, the placement of limitations on single account transactions within a timeframe may be the safety-net saving your firm from incurring significant implications should financial fraud take place.
4: Utilisation of the Address Verification System (AVS)
The AVS assesses the integer component of an invoice address associated with a particular card used for a transaction, to the address that had been provided to you so as to look for inconsistencies.
The AVS is built-in with the majority of payment systems, however, it is essential that you clarify this with your payment processor, to mitigate any misinformation surrounding this system.
5: Tighten up your Password Requirements
It is very simple for a computer hacker to obtain passwords through their own software. Obligating your consumers to maintain a standard of password enforcement will assist in keeping scammers and identity thieves away.
Some practices that you should adopt to ensure a high level of password security is the requirement that consumers include non-alphanumeric letters and characters, as well as capitalisation in their passwords. Additionally, you may also require them to periodically change their passwords, to prevent any information hackers may hold from keeping relevancy.
6: Continuously update, upgrade, and manage your software
Keeping your operating system, security software, and network systems remain up-to-date, ensures that your online business remains defended into the long-term. Often, your suppliers will continuously update their proprietary software with patches and fixes to plug security faults that may arise. This will greatly reduce the risk imposed by fraudulent activity, malware, and viruses on your network and eCommerce.
On top of this, new and upcoming software and applications will allow your business to keep ahead. This will help to ensure that even the keenest and determined of hackers and fraudsters cannot keep up with the systems that you bring into your business.
Payment Card Industry and the Online Payment Principle
The Payment Card Industry Security Standards Council (PCISSC) has the obligation to hold up the standards of companies such as American Express, Visa, and Mastercard. Their role is to keep you and your consumers safe whilst making transactions online.
Alternatively, cryptocurrencies, such as Bitcoin, established a new and lucrative system for your online payment. However, the anonymity and other factors surrounding these cryptocurrencies make them highly lucrative for fraudulent transactions. Their volatility makes them a risk should you decide to include this payment gateway.
The pervasiveness of online fraud means that should your eCommerce continue to exist, so will the attempted fraudulent activities associated with it. Therefore, it is important you take all precautionary measures to prevent yourself from becoming the victim of online fraudsters. By doing this, you ensure the longevity of your online business, and prevent future financial implications!