With a rise in the e-commerce industry, there is also an increase in the number of duties to follow up with including sourcing product, quality control, customer service, SEO, HR, and what not! One of the major tasks that is often overlooked is fraud prevention.
With the frequency of data breaches recently, 6,515 reported breaches in 2018 alone -- stolen credit card data is readily available to cybercriminals. While the credit card companies identifying and stopping some of the frauds that occur, any criminal charge that slips through their fingers and makes its way to your website is your responsibility to stop. If you miss one, you will know about it, in the form of a fraud chargeback from your bank.
Receiving even one chargeback hurts. Below are the top ten fraud schemes to be aware of to prevent the next fraud attack on your website:
Classic fraud.
This type of fraud is generally committed by unpretentious fraudsters. Stolen credit card credentials are purchased on the dark web, and goods are sent to re-shippers in an attempt to retrieve the stolen stock. Often, internet proxies are used to mask the international IP where a majority of such frauds originate.
Triangulation fraud.
This type of fraud involves three parties -- a fraudster, an unsuspecting legitimate shopper and an e-commerce store.
An online storefront is created by the fraudster, often on e-commerce sites that offer high-demand goods at extremely low prices. The store collects payment for the goods it sells. The fraudster then uses other stolen credit card data; the names collected in order on his online storefront to purchase goods from a legitimate website, and then ship them to the customers that purchased on his new online storefront.
This type of fraud can usually be identified by the products that are targeted as well as some investigative work by locating an unsuspecting shopper who can identify the storefront where the stolen goods were purchased.
Interception fraud.
Fraudsters will create orders where the billing and shipping match the address linked to the card. Their goal is to intercept the package in any of the following ways:
This is the practice of testing the validity of a credit card number, with plans to use valid credentials at another website to commit fraud.
Fraudsters target websites that reveal a different response for each type of decline. For example, when a card is declined due to an incorrect expiration date, a different response is given, so they know they just need to find the expiration date. This is generally done by bots and such transaction attempts happen quickly, in rapid succession.
Account takeover fraud.
This occurs when a fraudster gets hold of a legitimate customer’s login credentials and take advantage of stored credit cards to purchase goods.
Fraud via identity theft.
In this case, the fraudster assumes another person’s identity, creates credit cards in the victim’s name and goes on a shopping spree. It is difficult to be identified as a fraudster behind such a fraud.
Friendly fraud or chargeback fraud.
An online shopper will make a purchase, then issue a chargeback, claiming their card was stolen. The chargeback usually occurs after the goods are delivered. This type of fraud is traditionally not carried out by typical criminals but rather by consumers who are clearly aware of what they are doing. This type of fraud is difficult to detect but can often be won via chargeback representing.
Affiliate fraud
Affiliate fraud refers to any false or unscrupulous activity conducted to generate commissions from an affiliate marketing program. Affiliate fraud also encompasses any activities that are explicitly forbidden under the terms and conditions of an affiliate marketing program.
Man in the middle
Man-in-the-middle fraud is a crime where an unauthorised third party obtains a consumer’s or business’s sensitive data as it is being sent over the Internet. This fraud can be accomplished fairly easily over an unsecured network, such as public WiFi, or a poorly protected home network. It can also be carried out through installing malware on the target’s computer.
Merchant identity fraud
This is one of the biggest scams that involve B2C activities but affects the B2B scenarios as well. Cyber scammers set up nice-looking web-shops with costly products priced low. Customers get enticed with the price and order products from these stores. However, the fraud sellers never ship the product to the customer and just disappear.
It is always advisable to stay checked on these top frauds and have hassle-free and secure business transactions.
Yuvraj Aman Singh is the CEO of Rocking Deals.
First Published: Jul 17, 2019 6:00 AM IST
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