Ecommerce Fraud Prevention: Saggy pants, black hoodie, and an aggressive behavior backed by a huge gun under the belt are not necessarily how a typical criminal will always look like - not at least a cybercriminal. It may well be a sharp-witted person sitting behind your computer screen inventing tricky ways of stealing your customers’ credit card numbers.

Any online business is going to have to deal with new internet-based threats and issues. ECommerce frauds are radically distinct from the ones witnessed in brick and mortar stores. The most glaring difference is that you cannot see the people transacting on your online store.

There will always be unscrupulous people whose sole goal is to rip off you and your customers. It then becomes your responsibility to educate yourself on the different kinds of eCommerce fraud and take adequate measures to protect your online store.

Here are some recommendations and tips on how you can protect your online store from eCommerce fraud.

Look for unusual activity while monitoring online transactions - Ecommerce Fraud Prevention

You have invested money and time in knowing your customers well. This makes you the best person to identify fraudulent and legitimate transactions. You know the shopping habits of your big spenders.
For instance, one of the customers recently changed their shipping address and is now willing to pay extra for shipping the products faster than before it may raise a suspicion that someone else has taken over the customer’s account and is trying to defraud.

This is why it is so important to look for red flags as you monitor the online transactions.

Another suspicious activity is when someone charges different cards for multiple orders. The same can be said of a phone number that does not match the area code of shipping or billing address.

Also, watch out for the customer who has never made a single purchase in the past and is now placing a humongous order.

Set up system alerts to detect fraud or suspicious activities.

Ensure PCI compliance and use credit card security codes - Ecommerce Fraud Prevention

Payment Card Industry Data Security Standard was launched in 2006 to protect e-commerce businesses and customers from online fraud.

It is important to note that PCI compliance is not optional and may result in hefty fines for non-compliance.

Make sure that your payment gateway guarantees compliance with the security mandates laid down by PCI, so you lower your chances of the data breach.

Credit card security codes help you prevent identity theft and online fraud. PCI rules do not allow online stores to store these codes. That makes it extremely difficult to steal them unless the physical card is compromised. And this makes them so effective in averting e-commerce fraud.

Ensure site security

Hackers will find it pretty easy to break in and steal valuable data unless you take serious measures to ensure secure your e-commerce store. Here are some things to consider:

  • Install an SSL certificate to secure transfer of sensitive data between the browser and your server. If you go for a COMODO SAN SSL Certificate then it can secure multiple domains. Using an SSL certificate will not only prevent you from “man in the middle attacks” it will also help you rank higher on Google.
  • Create strong passwords and require the same from your customers
  • Update your passwords on a regular basis
  • Use 2-factor authentication
  • Employ security solutions to prevent things like SQL injection attacks
  • Set up notifications for events such as failed logins
  • Hire a security auditor to keep a close eye on vulnerabilities in your website
  • Use monitoring software to prevent fraud in real-time
  • Install an automated database backup and restore solution
  • Keep the site updated with the latest security patches to stay immune to hacking attacks
  • The best thing to do is stay away from storing any sensitive customer data, so scammers have no reason to target you.

Pay attention to Shipping/Billing Addresses not matching with the IP address

Now, some customers may shop while they are traveling. But typically, these will be small ticket items. Not many people will fly miles from their home country to order a big fridge for their family.

So, pay close attention to shipping and billing addresses and match them with the IP address of the transaction. Ideally, they all should converge to the same location.

For instance, you get an order originating from Canada where the billing is set up for Toronto and the item is being shipped to New York. So, it seems like someone living in New York is getting a gift from their friend in Canada. All looks well, except that the IP address is Doing a reverse lookup tells you that this belongs to Japan! It seems a bit strange, doesn’t it?

IP addresses belonging to anonymous web proxies are another reason to be concerned about it. Stay on your toes to spot such things.

Make use of AVS (Address verification system). AVS tools help in verifying if the billing address of a customer matches the address registered with the credit card.

Beware of shipping fraud

  • Implement tracking numbers and require a signature on delivery. Not doing so means that anyone can claim they never received the package and ask for a refund.
  • This kind of fraud is ironically known as “friendly”, while it is not at all friendly to your e-commerce business. Using tracking numbers and signatures to confirm delivery will save your business from this chargeback fraud.
  • Stay clear of shipping to non-physical addresses. Some fraudsters use drop shipping addresses and PO boxes to stay invisible both online and offline. Not getting the package shipped to a physical location is a well-conceived plan for the fraudster, and it is a sure sign of e-commerce fraud for an online business. You may just save yourself a lot of hassle if you choose to not to deliver to non-physical locations. Combine this with requiring a signature on delivery to make it safer.
  • Be aware of fraudsters who are too keen on paying extra for expedited shipping – the earlier they get the product, the faster you will hear from them regarding the shipment “lost in transit”. Expedited shipping orders (especially in cases with a mismatch on billing and shipping addresses) are red flags for e-commerce fraud. A simple verification may just be enough to protect your online store from another shipping fraud.

So, no friendly frauds and no shipping fraud risks.

Do not let hackers have a field day at your expense. Follow these steps to secure your ecommerce store from security threats and hackers.

Credit: Zachary Hadlee, Freelance IT & Technology Content Writer