Types of e-Commerce Fraud

People try to find multiple ways to scam both customers and merchants on an ongoing basis. Nowadays, they don’t have to physically see or touch your credit card to do this. 

When the phrase ecommerce fraud is mentioned, many people think of stolen credit cards being utilized by thieves to acquire products from online stores. But credit card fraud is only a part of the many kinds of online fraud. 

Here are a few:

Credit Card Fraud

This is the general phrase for fraud that occurs with the use of a credit or debit card commonly called,”card-not-present fraud.” The criminal uses the stolen card details to buy goods or services from a web retailer.

A criminal may explore the dark web to buy the stolen card details, and then visit an online store using that stolen card info. This preliminary transaction misrepresents the stolen cardholder. 

Eventually, the shop owner is defrauded by the customer and could end up paying a chargeback fee to the card’s issuing bank. 

Merchants may also fall prey to “card testing” scams where cards are used to verify which ones are still working. Purchases that are small, low risk, but add up to a major hit on the merchant’s profits.

Forgery

Affiliate fraud creates affiliate fees. Affiliates receive commissions when consumers make purchases at a partner’s platform. 

Affiliates have a special, trackable web connection that leads to the merchant’s store pages. 

When the shopper clicks on a connection and makes a purchase, the affiliate is compensated by the merchant with a fee (typically a percentage of the sale price).

The fake activity can be used to both fraud online merchants and to raise online retailer commission levels.

A popular typosquatting scheme involves registering matching domain names that tend to be misspelled versions of the business’s real URL. The fraudster redirects the domain name to a web page with a referral address.

Chargeback Theft

A chargeback is a claim that a credit card company gives to a seller to reimburse a fraudulent or contested transaction but merchants can now utilize a chargeback management system to alleviate that problem.

Fraud may occur when an online customer makes a payment, receives the purchased item, but then demands a refund from the credit card company, which pushes it through the bank that issued the card. 

This form of fraud leads to the card issuer mandating that the merchant refund the sales sum to the issuing bank. When a customer requests a chargeback, the company must refund the money.

A typical chargeback fraud scenario involves an individual making a transaction online. Criminals wait a few weeks or months after delivery, then contact their bank and challenge the transaction, arguing it is illegal or fraudulent. 

Scam

Almost all ecommerce stores retain personal information, financial details, and purchasing history. Cybercriminals hack accounts via phishing schemes. 

In one of the most popular scams, fraudsters use phishing to steal usernames and passwords. They log in to customers’ accounts, change login info, and make fraudulent transactions. 

Social media login is a convenient way to get into online shops but it can also be risky if the information is leaked. 

Criminals are now stealing information from bots, resulting in consumers being overrun by identity theft.

Overall, to help prevent ecommerce fraud be careful to use only trusted sites and merchants when using your card info online.

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