Five eCommerce Fraud Trends to Watch in 2023
A study from Juniper Research1 reports that businesses’ cost of fraud is expected to rise by $7 billion to a grand total of $48 billion in 2023.It might feel overwhelming to be in the know about every type of fraud out there, so one of SouthState’s fraud experts, Alex Cummings, has put together a few key ecommerce trends to safeguard against.
What is ecommerce fraud?Ecommerce fraud takes place when scammers intercept a transaction on an ecommerce store with the goal of personal or financial gain. Also known as payment fraud, ecommerce fraudsters are trying to steal from either the customer, the merchant, or both. Ecommerce can originate as phishing attacks, advertising links routing to malicious or fraudulent websites, business email compromise, credit card theft, stolen credentials or other means.
What are types of ecommerce fraud?
Friendly fraudFriendly fraud happens when customers buy something online and later file a chargeback with their bank. Shoppers falsely claim their purchase wasn’t delivered, looked different from what they ordered, or canceled their order shortly after placing it. One weapon to use against this type of fraud is chargeback management software that allows you to spot trends and identify requests to dispute.
Read more: How Merchant Terminals Can Prevent Credit Card Processing Fraud
Card testingA common type of fraud, card testing happens when a scammer attempts to use a stolen credit card or stolen credentials. They experiment with a small purchase to avoid raising a red flag. If they’re successful, they can quickly rack up expensive, unauthorized purchases.
Merchants can experience card testing as both fraudulent purchases made by scammers with stolen credentials or if their business credit cards are compromised and used to make purchases.
Online retailer fraudBusinesses should be wary of sophisticated scammers who seek to copy their websites in order to solicit false purchases. They can obtain a customer’s credit card information and personal details to use for future scams.
Package interception fraudEcommerce fraud can make a purchase seem legitimate until the very end. With interception fraud, a scammer makes a possibly high-end purchase using stolen credentials including the correct mailing address tied to the credit card. Their next step is to contact your customer service team via email or phone, claiming an error, and ask to change the shipping address on the order. They can then sit back and wait for the goods to arrive on their doorstep.
Account takeoverAs news of another data breach hits the airwaves, your customers could be among those affected by an account takeover. With this type of identity theft, scammers target user names and passwords with the goal of purchasing expensive goods or gaining access to other accounts. Sophisticated fraudsters with thousands of credentials at their disposal use bots to make illegitimate purchases on a large scale.
The best defenses against ecommerce fraud include high-quality fraud detection and prevention management system. For more security resources, visit the Federal Trade Commission’s website.
About the Author, Alex Cummings: Alex Cummings is the Information Security Awareness Program Manager for SouthState, overseeing information security training and communication. He’s been with the bank for 5 years. He studied computer information systems at the University of South Carolina, where he started the Cyber Security Club and was recognized in several regional and national competitions.