Your suspicions are correct: ecommerce fraud is on the rise. A nearly 30% rise, to put an exact number on it, according to a year-over-year study from LexisNexis Risk Solutions. Even more troubling: that figure is almost twice the growth of ecommerce sales, based on data from Digital Commerce 360.
To make matters worse, ecommerce merchants have to fight fraud on two different fronts. For one, you have to protect yourselves from schemes targeting merchants specifically, like fraudulent chargebacks or site mimicking (see below).
But on top of that, you also have to protect your customers from scams as well. Harboring scammers on your site is a kiss of death for online stores, even if you’re as much of a victim as your shoppers.
Luckily, ecommerce fraud prevention is also on the rise, with methods just as sophisticated as the scams they thwart. In this article, we outline the 7 worst and most common fraud scams for ecommerce: how they work, what warning signs to watch out for, your best defenses, and 10 ecommerce fraud prevention tools to optimize security.
Let’s get started!
7 Worst Ecommerce Fraud Scams to Watch For
Your first defense against ecommerce fraud is simply knowing what to look out for. Here are the 7 most common scams online stores are vulnerable to.
1. Email Account Phishing
Most people are familiar with email phishing scams, so let’s start there. These are as old as the internet itself, so many of you have likely already opened an email from a stranger asking for sensitive account information.
However, lately we’re seeing an increase in scammers posing not as Nigerian princes, but as ecommerce stores. They send emails disguised as order/delivery confirmations, aimed at either extracting sensitive account data or leading victims to a fraudulent site.
In the best-case scenarios, these lead to an unexpected advertisement page rather than an official store page. Other times, it’s not so harmless; links in phishing emails often go to trap sites with viruses, malware, or other hacking-related misfortunes. That’s why it’s always recommended to hover over suspicious links rather than click them.
2. Identity Theft
If some poor soul loses their account information to a phishing email, what happens next? The scammer takes that info and buys a bunch of expensive gifts for themselves, and guess who pays the bill. Posing as someone else and making purchases with their financial information is known as identity theft.
Strange as it sounds, the retailer is often the one hurt most by identity theft: a credit card company usually initiate chargebacks on behalf of the victim, but with no obligation to return the merchandise. Even if the retailer manages to reclaim products, they’re no longer new. The only way for a retailer to escape identity theft unscathed is to stop it before it starts.
This article was written by mattellis and originally published on Blog – Kinsta Managed WordPress Hosting.