Fraud Prevention on E-Commerce Websites

What is E-Commerce Fraud?

Ecommerce fraud is a type of fraud that happens on e-commerce websites. Ecommerce fraud can be seen as a form of cybercrime, and it can be committed by both individuals and businesses. It is the act of stealing money or personal information from a company by pretending to be a legitimate customer.

The most common type of ecommerce fraud is when someone buys something with a stolen credit card, but it also can involve hacking into a retailer's database and changing information about your account. 

E-Commerce fraud can be broadly classified under the following categories. 

1. Card not present (CNP) fraud - When someone buys something online without using their real identity. This could be done by using a fake name or address, or it might involve using the real name and address of someone else. 
2.  Counterfeit card fraud - This type of crime occurs when criminals take your credit card number and create fake cards using it. 
3.  Card not received (CNR) - This type of crime happens when criminals take your credit card information and use it to make purchases without ever receiving the goods or services they paid for.

1. Card-Not-Present Fraud

Card-not-present fraud is a type of credit card fraud that occurs when a customer uses their credit card to make an online purchase. This is often referred to as "card not present" fraud, or CNP.

Online shoppers are typically more vulnerable to this kind of fraud than in-store customers because itâ s easier for them to hide their identity and commit a fraudulent transaction without being caught by security cameras or store employees. By comparison, in stores like Walmart and Target, cashiers will ask for identification from anyone who looks suspicious (a young person making multiple purchases with gift cards, for example) before completing the sale. Online merchants don't have access to these same toolsâ they can only rely on the information provided by customers during checkout

2. Phishing/Account Takeover Fraud

Phishing is a form of identity theft that occurs when an individual attempts to gain access to your personal information. It can happen through email, text message or phone call and usually involves the perpetrator posing as someone you know in order to get you to reveal sensitive details about yourself.

A common example of phishing would be getting an email from your bank asking you to click on a link and update your account information. But since the email isn't coming from your bank's official website, it's likely that this is a fake page designed by cybercriminals just for this purpose: collecting your online banking credentials so they can steal money from your account later on. Phishing scams often start with something simple like this and escalate over time until the scammer has enough information about their victim's identityâ from social security number (SSN) down to home addressâ to commit crimes such as opening credit cards in their victimâ s name or even filing tax returns using their SSN instead of their own.

3. Intercepted Payments

An intercepted payment is a type of fraud that occurs when a third party intercepts the payment and makes their own transfer to themselves. This can happen in a variety of ways, but most commonly itâ s through malware or skimming devices that are placed on ATMs or credit card terminals by hackers. Other times, merchants or employees may deliberately intercept payments and remove funds from your account without authorization.

4. Triangulation Fraud

Triangulation fraud is a common form of credit card fraud. It can occur when customers place an order on your website, but then call customer service with a different address and place another order under the same credit card.

This type of scam allows criminals to steal credit card information for their own use. The best way to prevent triangulation fraud is by canceling orders that you believe may be fraudulent and alerting your payment processor immediately if you notice any suspicious activity on your account.

Fraud Prevention Techniques

Credit card fraud is a major problem for e-commerce websites. Credit card companies lose billions of dollars each year to fraudulent purchases, and these losses are passed on to consumers in the form of higher fees. You can protect your customers from credit card fraud by implementing some basic techniques.

1. Security Audits

2. PCI Compliance

PCI compliance is a set of standards for protecting credit card information. PCI compliance requires that all data containing credit card information be stored in a database, and the database must be protected. This means that the database, which contains your customers' personal information, must be encrypted to prevent unauthorized access.

The easiest way for an ecommerce website to comply with PCI standards is by using one or more secure sockets layer (SSL) certificates. SSL certificates encrypt all information sent over the network between your server and browsers so that no one can eavesdrop on it or tamper with it as it travels through cyberspace.

3. CVV and AVS Verification

CVV stands for Card Verification Code. CVV is a three- or four-digit number printed on your credit card's signature panel. It appears on the back of a debit card in the signature box, but not on prepaid cards.

AVS stands for Address Verification System and is used to verify that the billing address you entered matches what is listed on your credit card statement. The AVS process uses information from both sides of the transaction to ensure that no fraudulent transactions are made over an insecure connection (think internet cafes).

The advantages of CVV and AVS verification include:

• Reducing false declines when entering credit card information online.
• Improving security by providing additional validation steps before completing a purchase.
  

4. HTTPS Encryption

HTTPS encryption is a secure protocol that is used to transmit private data, such as credit card information. When you are shopping online, your browser establishes an encrypted connection with the server and sends the data of your order. Your order will then be processed by the merchantâ s server and send back to you through this encrypted channel. This ensures that no one can intercept your sensitive information during transmission.

As a website owner or e-commerce business leader, it is crucial for you to ensure that all websites under your control are using HTTPS encryption so that users can feel confident about submitting their payment details when making purchases at your site.

Conclusion

E-Commerce fraud is a huge problem but a manageable one. With the right tools and practices it is totally possible to prevent fraudulent transactions on e-commerce websites. Along with the software tools, business must also implement an internal process to review orders and confirm the identity of buyers. Don't let fraud ruin your e-commerce business. Implementing fraud prevention techniques can help protect you and your customers and keep them coming back to your online store.