How To Protect Your Online Business and Customers from eCommerce Fraud Attacks

You can secure your online business and the hundreds of customers who depend on your eCommerce business by taking the appropriate steps. Here we explain fraud attacks retailers' are always up against.

By:
Gregg Beall
eCommerce Strategy
ecommerce fraud protection - Rakuten Super Logistics

Technology continues to revolutionize every nook and cranny of eCommerce, such that the sector is currently booming. However, this growth by eCommerce software and other technological devices comes at a heavy price for online retailers and consumers.

Reports by Finances Online show that successful eCommerce attacks increased to 27% and 48% for small and medium-sized retailers, respectively. It also stated that the loss from fraudulent online activities amounts to over $1 billion annually.

You can secure your online business and the hundreds of customers who depend on your eCommerce business by taking the appropriate steps. This post explains fraud attacks retailers' are always up against and the proper ways to prevent and stop them.

ecommerce fraud protection - Rakuten Super Logistics

Types of Online eCommerce Frauds That Retailers Face

Although online merchants sell more than brick and mortar stores today, they face a mountain of fraud challenges compared to their physical counterparts. Some of the scams involved in the eCommerce order fulfillment process include:

Credit Card Fraud

Credit card fraud is the most rampant form of eCommerce fraud, as it accounts for nearly 71% of all online attacks. Fraudsters don't usually target customers' credit cards directly but instead use phishing scams via phone or email to obtain their card details and make illegal purchases.

Account Take Over Fraud

This type of fraud occurs when scammers illegally gain access to existing eCommerce or payment accounts, such as an Amazon or PayPal account. It also happens for new accounts; new accounts fraud (NAF), where fraudsters illegally create new accounts using customer information.

Chargebacks

Also known as the refund or friendly fraud, this scheme involves fraudsters illegally purchasing items using other customers' information and then returning the item, only to request a refund to their accounts. It causes the most business fulfillment fraud losses as almost 30% of online products are always returned.

Affiliate Fraud

While this fraud isn't as common as the rest, it usually bleeds a lot of eCommerce fulfillment service money. For example, when online merchants run affiliate marketing campaigns, they're sometimes deceived by false impressions (signups and clicks) to continue paying commissions.

Steps To Protect Your Customers and eCommerce Store From Fraud

There are different ways, technical and non-technical, to identify and protect an eCommerce business from fraud attacks, but the decision on which to take ultimately lies with the business owner. These include:

Set Fraud Prevention Measures in Place

Prevention is always the first step all eCommerce retailers should take, whether or not they've experienced fraudulent cases before. As eCommerce grows, fraudsters always find new ways to scam unsuspecting and ignorant retailers plus their customers. Therefore, it is essential to create awareness of scams and scammers and have fraud prevention tools early in case of fraudulent activity.

Monitor Your Accounts

Some aspects of fulfillment systems become predictable after a while in the business, so merchants can easily detect suspicious activity. The main areas to focus on include receipts and transactions. Check for:

  • Inconsistent shipping and billing information
  • Purchases that occur at irregular business times
  • Delivery requests by an account to different addresses
  • A high number of purchases at once

Use Verification Options

Take advantage of today's technological innovations to safeguard your eCommerce store. The two most prominent fraud prevention tools are:

  • Address Verification System (AVS): This service offered by the issuing bank or credit card holder helps detect suspicious transactions when they occur. The AVS system checks the submitted billing against that of the registered cardholder to confirm that the two addresses match. If they don't, the system immediately declines or flags the transaction for investigation.
  • Card Verification Value: Behind every Visa, MasterCard, Discover, or American Express Card, there are three or four-digit codes that retailers can use to protect their businesses. Set up a prompt for the code before any purchase to weed out the criminals from customers.

Set Transaction Limits

Limit volume purchases to minimize fraud and your store should have one too. While this move may seem like cutting business sales from under, it keeps losses at a minimum should an eCommerce fraud attack occur, as criminals always look to exploit the maximum before moving on.

Stay Updated

Payment Card Industry (PCI) compliance rules require every eCommerce business to have the necessary structures for secure credit card transactions. The best way to do this is to update your eCommerce software with the latest programs. Of course, if you operate a SaaS eCommerce store, your site already has the automatic update feature.

Key Takeaways

Although eCommerce businesses can take these steps to detect and prevent fraud, the surest way to protect stores and their customers is by partnering with a knowledgeable 3PL provider who cares about your business as much as you do.

Learn how outsourcing to Rakuten Super Logistics can reduce your shipment fulfillment costs while delivering fast and accurate order fulfillment to help protect your business reputation. Subscribe to our newsletter for more helpful tips and eCommerce related news.

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Rakuten Super Logistics is a leading eCommerce order fulfillment company that provides the scalability, flexibility, and cost savings retailers demand.

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