It’s a great time to be an online retailer. Online sales over the Christmas period exceeded transactions in brick-and-mortar shops, and the trend is set to continue as e-tailers make online shopping easier and more accessible.
However, there are also more fraudsters than ever targeting online businesses. Put simply, online fraud is big business and you have to be on top of your game if sell things online.
Credit card fraud attempts grew from 2014 to 2015, but thanks to the introduction of the EMV chip (that makes physical credit cards much harder to counterfeit), experts predict that fraud will decline offline, but criminals will move online.
Knowing how to spot suspicious shoppers is key, so we’ve pulled together the most common types of fraud that you might encounter.
If you notice a user purchasing many high-value goods or variations of the same product (for example, 20 silver rings in varying sizes), it may be a fraudster looking to maximize a stolen credit card number before it’s cancelled. The fraudster behind this type of order often purchases as many items as possible, that can be easily resold.
Arming yourself with data can help you decide whether to process such orders, or cancel them. If you have a fraud prevention solution in place, it can help you pull social media links, email account age and purchase history to verify a shopper’s identity.
Credit Card testing
If a cyber-crook has a stash of stolen credit card numbers, you may notice a series of unusually small purchases. The goal of credit card testing isn’t really to buy a bunch of things; rather, the fraudster is trying to determine which credit card numbers are still valid and which have been cancelled. If you offer free shipping or a “guest” check-out process, fraudsters may be drawn to your shop to try out as many cards as possible, before buying the big-ticket items.
Smart fraud solutions can highlight suspicious IP address activity or device fingerprints.
This type of fraud occurs when a customer bypasses the retailer by going straight to their bank to dispute a purchase. The customer may say that the order never arrived (even when it did) or that their credit card was stolen (when it wasn’t). The bank will issue a refund to the customer and deduct the transaction from the merchant, often with an added fee.
This type of fraud is a challenge, as fraudsters skip the merchant altogether.
Retailers that suspect refund fraud may add identity verification steps, like signature-required delivery and phone-call follow-ups.
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