Wednesday, 27th October 2021
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Some of the E-commerce fraud that is common

With the onset of COVID-19, as the dependency on e-commerce websites rises exponentially, it demands a closer look into online shopping safety.

With the onset of COVID-19, as the dependency on e-commerce websites rises exponentially, it demands a closer look into online shopping safety. Apart from money loss, these scams can also lead to the loss of valuable, confidential customer data. Therefore, installing robust and efficient e-commerce security and fraud protection system is a dire need.

E-commerce fraud is abundant today, and it is impacting not only customers but also sellers. From false identities to using false cards for purchases, scammers use fake components to rob both the seller and buyer. News reports talk about various methods and approaches that fraudsters adopt. But some tactics are deemed the most common out of them all.
In this article, let us take a look at the six common kinds of e-commerce fraud.


Card Testing Fraud
– Also known as card cracking, this fraud widely occurs in an e-commerce business. A fraudster gains access to one or more stolen credit card numbers through theft or by purchasing data through the dark web. Fraudsters do not know whether these cards can make successful transactions, and if so, what is the limit associated with it. Thus, they visit e-commerce websites to make small purchases. It is to confirm whether the credit card works. Once they confirm it, they will make much more expensive transactions. These initial purchases might go unnoticed by both merchants and customers until the fraudsters make a much more significant purchase that would let people understand they have been victims of credit card testing fraud.

Friendly Fraud– Also known as chargeback fraud, it occurs when someone makes an online purchase of an item or service and requests a chargeback from the payment processor. They would do so by claiming the transaction to be invalid. The card companies or banks would then return the said transaction value to the customer, and the retailer would still pay it. These frauds are mainly done to receive items for free. For example, someone might buy an item using a credit card and then claim a refund stating that the product never got delivered. Thus, it can be stated that chargeback fraud occurs when they contact the credit card issuer to dispute a charge they intend to make.

Refund Fraud– It occurs when someone uses a stolen credit card for purchasing something on an e-commerce website. The fraudsters, in these cases, contact the e-commerce merchant and request a refund of an overpayment. They would ask for a refund of that excess amount, but it should be paid through an alternative method, as the mentioned card has been closed. This would mean that the extra charge to the original credit card would not be refunded, and the e-commerce business will be responsible to the cardholder for the full amount. These types of frauds are hard to detect. Sometimes a genuine customer might request the businesses to refund the amount alternatively, whereas in other cases, it can be a fraudster.

Account Takeover Fraud
– It occurs when someone gets access to a user’s account on an e-commerce website. It can be done in several ways: purchasing stolen passwords or other vital information from the dark web. These are also done by successfully implementing phishing schemes on a given customer. After gaining access to an account, they start performing various fraudulent activities. For example, they change details on the account and even make purchases from the e-commerce store.


Interception Fraud
– This is when a fraudster places an order on your e-commerce website wherein the billing and shipping addresses match the information found from a stolen credit card. After placing the order, the fraudsters try to intercept the package and take the goods for themselves. There are various ways of doing so:
After placing the order, they might call up your customer servicing department and ask your representative to change the address of the order before it gets shipped.

They might also contact the shipper (FedX, for example) and ask them to re-route the package, pretending to be the customer.

If they live close to the victim, they might wait for the physical delivery of the package and take it from there.
In any of the above cases, the fraudsters receive the package, but the victim makes the payment.

Triangulation Fraud
– Here, the fraudster sets up a storefront on any e-commerce platform (like Amazon or Shopify) that sells highly demanded products at affordable prices. Customers would come up to these stores searching for good products, thinking that such a low price would benefit them. But the fraudsters would take up all the credit card information from that website and purchase legitimate goods for you. It is one of the most common ways of stealing credit card information.