The internet has made it easier for entrepreneurs to build their enterprises by reaching more people. Communication with prospective clients and displaying the products to a bigger audience are some ways in which people in business leverage the internet. From that, these entrepreneurs end up making a lot of sales. There are, however, many challenges faced by online traders. E-commerce fraud has become a significant threat, and the number of cases continues to grow as new fraudsters join the game.
What is E-Commerce Fraud?
E-commerce or purchase fraud refers to a situation where a fraudster uses a fake or stolen credit card to buy goods from a merchant. In the long run, the merchant goes without the payment for the sale that was made. This has led to tremendous losses, and that is why you need to learn how to reduce chargebacks.
There are different types of this crime that you should be aware of to be on the safe side. They include:
Refund Fraud
This happens when a client purchases products from an e-commerce website using a stolen credit card and then asks for a refund for accidental overpayment from the online shop. The fraudster gives an alternative method for reimbursement, pretending that their credit card has been closed. This is a scenario that causes a stressful claiming process for the merchant and cardholder. Fortunately, there are professionals out there who offer quality chargeback services.
Friendly Fraud
A client will use a credit or debit card to order goods or services from an online merchant. Later, the same customer asks for reimbursement, claiming that their card details were stolen. In most cases, the refund goes through, but the fraudster does not return the products. Service providers are the most vulnerable online traders for this type of e-commerce fraud.
Triangulation Fraud
This type of crime is carried out by the fraudster setting a storefront on reputable online platforms. The storefront attracts a good number of shoppers who are attracted by the surprisingly low prices. After the shoppers make their orders on the storefront, the fraudster uses stolen credit card details to purchase the products from a genuine e-commerce website. The shopper gets the actual products, but the owners of the stolen credit cards and the legitimate e-commerce website suffer a blow.
Interception Fraud
A fraudster steals a credit card in this scenario and uses it to order products from an online shop. The billing and shipping addresses match the information on the stolen card. After the order is placed, the fraudster’s main job is to intercept the delivery and keep the products to themselves.
Clean Fraud
The name ‘clean’ should not confuse you because this fraud is as dirty as the other types. What happens here is that a stolen credit card is used to buy products from an e-commerce store, but the fraud detection functions are disabled by how the transaction is manipulated.
Having an online business presents you with an excellent opportunity to make good money. However, as days go by, online fraudsters are adopting new ways to steal from you. Credit and debit card theft has become widespread, and conquering this nightmare is not a walk in the park.