[UPDATED] Ecommerce fraud prevention must be your utmost priority in 2020. You know why? Because ecommerce sales are going to reach $630+ billion by this year (2020).
Where there is money involved, there will be criminals eyeing you. Online fraudsters are coming up with better tactics to ensure they enjoy better incentives. In today’s digital landscape, fighting new ecommerce fraud tactics demands effective ecommerce security for your online business.
If appropriate ecommerce fraud prevention measures aren’t taken, it’s projected that ecommerce fraud losses in the United States can sum up to more than $12 billion by 2020.
While there’s not much you can do to stop online fraudsters from making you their victim, you can still fight them back. If you wish to know how to prevent ecommerce fraud, there are multiple ecommerce fraud protection tools and services that can help you in securing your hard earned profits from the bad guys.
- Basics of Ecommerce Fraud Prevention
- Ecommerce Fraud Types
- Ecommerce Fraud Prevention Tools
- Fraud Tips For Ecommerce Merchants
- Tips For Online Shoppers
But before we proceed to discuss which ecommerce fraud tools you can use for your business, you must start with the basics.
Basics of Ecommerce Fraud Prevention
ou and your team must juggle multiple responsibilities like product sourcing, quality control, content, SEO, HR, etc. But amongst the essentials, ecommerce fraud prevention best practices are overlooked. You must start with the basics:
1. Addressing Verification System
Use AVS (Address Verification System). It’s amazing. It helps you secure your ecommerce business by verifying the customer’s billing address, whether it’s the same as the credit card company has on the records or not.
2. Following PCI Standards
PCI or, Payment Card Industry (PCI) has security regulations for every ecommerce company to follow. These standards make your transactions more secure. If you don’t adhere to the PCI standards, you can easily become a victim to ecommerce frauds or might even expose yourself to a hefty lawsuit.
The bad guys hide behind international borders, and because your local authorities may have no jurisdiction over them, it can be problematic for you to recover your stolen money or data.
3. Setting Strong Password Requirements
Restrictive password requirements often frustrate us. But as a matter of fact, using a complicated password protects your customers as well as your business. It is a smart practice to insert different types of characters in your password to reduce the chances for hackers to attack you.
Ecommerce Fraud Types
The following three ecommerce fraud examples are quite common and you must take all the necessary ecommerce preventive measures to keep your online business safe.
1. Triangulation Fraud
There are three parties involved in this type of ecommerce fraud. The fraudster, ecommerce store, and the unsuspecting legitimate shopper. The fraudster creates an online store that offers high demand goods at low prices.
The unsuspecting customer places an online order by using his credit or debit card. The fraudster orders the same product from a legitimate ecommerce website using the stolen credit card credentials.
2. Interception Fraud
In this type of fraud, the fraudsters create orders by using stolen credit card information. They deliver the products to themselves while the owner of the funds becomes the victim of interception fraud.
3. Account Takeover Fraud
In simpler terms, this is identity theft. The fraudster/hacker gains access to a registered customer’s credit account and uses the credit card information to pose as a known and trusted shopper.
Ecommerce Fraud Prevention Tools
Along with providing tremendous opportunities for business expansion, there exists a high chance of exposure to online threats within the ecommerce industry. With the right fraud protection tools, you can safeguard your business with minimum effort.
That’s why I have curated a list of five important ecommerce fraud prevention tools that you can use to secure yourself from online threats.
Supported Platforms: Magento, PrestaShop, Shopify, WooCommerce & ZenCart
Pricing: $19 per month
Free Plan: No
Free Trial: Yes (30 days)
Subuno comes with 20+ fraud detection tools. It lets you see your customer’s location, enquire whether their details match up, validate how long their email address has been used, etc.
You can review each order on an individual page. You can also use color warnings and tools for comprehensive verification. Their algorithm can analyze 100+ risk factors to secure your business against fraudulent orders.
Supported Platforms: Magento, Shopify
Pricing: Depends on your transaction volume
Free Plan: No
Free Trial: No
Riskified offers great anti-fraud services including real-time insights with the assistance of cutting-edge machine learning algorithms. It provides an opportunity for you to avoid any sort of delays.
The service offers an array of analytical methods, particularly IP and geo-location. They also offer proxy detection, social media, order linking, device and browser fingerprinting, and chargeback fraud tools.
Risk flags or scores are old school. Riskified simplifies the game by giving you a clear “decline or approve” answer on every transaction. It’s your call to review any shady transaction(s) that you want. Moreover, they charge fees only for the approved orders that generate sales.
3. Fraudlabs Pro
Supported Platforms: Magento, OpenCart, osCommerce, PrestaShop, Shopify, VirtueMart, WooCommerce, and ZenCart
Pricing: $29.95 per month
Free Plan: Yes
Free Trial: No
It offers 40+ validation rules for effective ecommerce fraud screening as well as numerous blacklist records contributed by various international merchants.
You can avail the services of Fraudlabs Pro with their free plan which accepts 500 queries per month and supports different variations of order validation. Within the free plan, you can also gain access to features like risk scoring, email notifications, merchant reporting tool, and SMS validation credits.
If you have subscribed for a paid plan, you can access the advanced features such as email validity check, social profile query, custom country, ISP usage, email domain age, high-risk username, and password.
Supported Platforms: All ecommerce platforms
Pricing: Starting at $0,0015 per transaction
Free Plan: No
Free Trial: Yes (30 days)
DupZapper is fast and easy to install. It takes only 15 minutes to set up its HTML tracking code on your ecommerce website. Also, there’s no API integration necessary.
You can avail the latest device identification and fingerprinting technologies by using DunZapper. Their smart machine learning algorithm can trace the geographic consistency of data registration, detect cookie blocking attempts, and suggest the use of a proxy.
It also lets you review which accounts have been created by the same user. All suspicious activities are shown in comprehensive reports before any risky transaction takes place.
Supported Platforms: Magento
Pricing: Based on transaction volume
Free Plan: No
Free Trial: Yes
This Magento fraud prevention tool has shown exemplary results in multiple industries. The risk decision rules engine of Kount utilizes 200+ data variables that you can adapt as per your own needs.
It helps in accelerating the process of transaction approval by providing a 300- millisecond response time. Kount conducts fraudulent checks by using advanced AI technologies, device ID, geo-location, order linking features, etc.
The best part is its easy-to-use interface. All the information is visible on a single screen, hence, you won’t have to switch between different interfaces.
Fraud Tips For Ecommerce Merchants
1. Train your Customer Support for Ecommerce Fraud Prevention
Ecommerce customer service plays a vital role in ecommerce fraud protection. It assists in screening ecommerce frauds that can hurt your business during peak sales season.
When your un-trained customer support team rushes the order approvals, it can allow fraudsters to bypass your business security systems. Train your customer service representatives to watch out for fraud indicators. Fraudsters target front line customer service representatives who usually do not have the appropriate level of anti-fraud training.
Consider adding additional customer service support during your peak sales season. The speed at which your customer support responds to inquiries is directly related to the customer’s satisfaction.
You must respond back to their concerns as soon as possible in order to make sure they are happy. If your current staff can keep this up then you must not worry, else you must train them or onboard others if necessary.
2. Come up with Personalized Policies
Don’t just copy/paste the legal policies of random ecommerce webstores and apply them on to your website. Take your time, and think about how you’d try to defraud your online ecommerce business.
Fraudsters often use ingenious methods depending on the product niche and location. Formulate policies and take necessary credit card fraud prevention measures to reduce your risk.
After you decide on your policies, stick with them! If ever a customer tries to force you break your own policies, don’t give in! Even if the lead appears legitimate and would likely make a successful payment, violating your store policy must be a no-no. You wouldn’t enjoy dealing with chargebacks, so reduce the risk as much as possible.
3. Manually Review All Orders
Unless your website is receiving thousands of orders daily, don’t automate the process of order fulfillment. Personally check each order, or delegate the task to an experienced sales professional.
Sometimes, human intuition can prevent sales problems from arising, which a software may miss. At the very least, do some manual verification of unusual orders. Call the customer, and try to garner as much information as possible to help you decide whether or not to fulfill the order.
In this customer vetting process, make sure to use the Address Verification System (AVS) and Card Verification Value (CVV) to ensure the legitimacy of a customer. If any discrepancy is found, call the customer and find out the reason for it.
4. Use a Renowned Ecommerce Solution
You want to build your webstore on a secure, popular ecommerce hosting provider. Don’t take a risk by trying out new ecommerce solutions. In the digital market, Magento, WooCommerce and Prestashop are top notch solutions for online ventures. These software have plugins, such as the Fraud Order Detection System which are highly secure and powerful.
5. Prepare for the Holiday Season!
The Holiday Season is just around the corner. If you’re experimenting with new holiday marketing ideas, then you must ensure you’re taking necessary ecommerce security prevention measures.
This last quarter of the year contributes the largest share to your annual revenue. Online fraudsters are fully committed and operational to take advantage of the Holiday Season. Start optimizing your web store(s) today!
Tips For Online Shoppers
Holiday shoppers hunt for the best deals available with free shipping offers. But you must ensure the delivery and exchange policies of the vendor you’re purchasing goods from, are crystal clear to ensure online fraud protection.
Many businesses upload a summary of their shipping costs and other policies on their websites in order to save time. With that said, you can take the following online fraud prevention measures to ensure your safety from online threats.
1. No Debit, Only Credit
You must use your credit card instead of your debit card to purchase online as it is more secure. If a fraudster gets his hands on your debit card, he can gain access to your bank account.
2. Be Careful when Clicking CTAs
Do not immediately click on the pop-ups, or purchase anything from pop-up deals. You must land on the product page and purchase the product from there. It is also recommended not to click on ‘buy now’ or similar CTAs when you receive promotional emails. Instead, visit and order from their website.
3. Make use of Password Manager
Most of the merchants offer ‘Save Your Payment Information’ to make it more convenient for the customers to purchase from them in the future. Therefore, if you are shopping from a lot of ecommerce websites, especially during Black Friday or Cyber Monday, you must use strong passwords.
A weak password makes you vulnerable and you set yourself up for online theft. Make use of a password manager if need be. It will let you generate a long and unique password for any website. Also, they will have a copy saved so even if you forget it, you can easily retrieve it.
By and Large,
Hopefully you will find this article informative. The aforementioned ecommerce fraud prevention tools and techniques can help you secure your business with minimum effort.
If by chance I have missed any ecommerce fraud protection strategy, or tool that deserves to be in this blog piece, do let me know in the comments section below.
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