Online retail platforms today deal with about 206,000 fraudulent attacks every month that target their virtual stores. With the growing popularity of e-commerce and online shopping, there are now higher chances for cybercriminals and malicious third parties to defraud online businesses for monetary gain.
If your business primarily depends on e-commerce, you must use a fraud management system to protect your data and finances against hackers who intend to steal from you, harm your brand’s reputation, alienate your audience, and intend to profit at your expense.
The Cost of Payment Fraud Today
Businesses that accept payments from customers very well understand the damage that fraud can cause, especially in card-not-present transactions that take place completely online. According to the Global Payment Risk Mitigation Report by FIS, about 89% of merchants reported losing revenue to fraudulent payments in 2020. This gets worse when you look at the level of damage done. About 38% of these merchants bore a loss of over 6% of their revenue due to this. For low-budget and low-margin businesses, over 51% of merchants lost between 1% to 5% of their revenue to fraudulent payments in 2020.
9 Ways to Prevent eCommerce Fraud in your Store:
- Regularly audit site security.
If you want to find the flaws and vulnerabilities in your website or platform’s security before the fraudsters do, regular security audits are a must. While you conduct these audits, there are several factors you should consider. Some key considerations are whether your cart software and additional website plug-ins are updated or not, and whether your SSL certification is updated and active.
- Ensure your online store is PCI compliant.
If you are running an e-store that accepts payments via credit card, you need to be PCI compliant. PCI is short for Payment Card Industry, which is the standard for card payment compliance. The PCI standard has been developed and is managed by the PCI Security Standards Council. It ensures that credit card transactions are secure and safe.
- Regularly monitor your platform for abnormal activity.
Physical stores hire security personnel and use CCTV cameras to identify shoplifters. As an online store owner, you can protect your interests by monitoring your platform for suspicious behavior. For example, go through your transactions and accounts to find any red flags like inconsistent shipping and billing information or unlikely delivery locations of customers.
- Use an AVS (Address Verification Service).
Credit card companies and processors normally offer businesses an AVS that detects suspicious credit card activity in real-time. AVS works by cross-referencing a customer’s billing address with the issuing bank’s record of the cardholder’s permanent address. This ensures that you are dealing with real customers and helps in preventing credit card fraud.
- Demand the CVV (Card Verification Value) number for every transaction.
VISA, Discover and Mastercard cards have a three-digit code at the back, while American Express cards have a four-digit code. This code is called the CVV code or CSC (Card Security Code). By making it mandatory to enter the CVV code for each transaction, businesses can ensure that customers physically possess the credit card as they are carrying out the transaction.
- Use HTTPS (Hypertext Transfer Protocol Secure).
HTTPS refers to the secure form of HTTP, the main protocol that is used for sending data from a customer’s browser to your store. When you use HTTPS, the protocol encrypts customer data like customer name, address and credit card number to keep this sensitive information protected.
- Don’t collect unnecessary sensitive data from customers.
Hackers cannot steal data that you do not have. A surefire way to keep your store and your customers’ data safe from a data breach is by collecting the bare minimum amount of customer data necessary. Only ask for the information you need for the completion of a transaction and shipping of the product.
- Double-check the credit card address and IP address.
A public IP address is a series of numbers divided using periods that identifies computers uniquely using IP or Internet Protocol to communicate through the internet. Every customer order comes from a unique IP address. This address can tell you the geographical location of the world where the purchase is being made from.
- Avoid non-physical addresses.
Malicious third parties often use anonymous locations or PO boxes instead of their physical location to avoid getting detected. Almost every online business has received orders that direct them to such a location rather than a concrete real home or work address. To keep your business safe from this kind of fraud, the rule of thumb for online merchants is to never ship orders placed online to other virtual locations and PO boxes.
The good thing is that if you understand the impact of e-commerce fraud and how it can be identified and prevented, you are in a position to act against it by setting up a fraud management system for your e-commerce store.