Online E-commerce Fraud

Online fraud” could be described as illegal action done by some cyber-criminal on an internet website. It results in unauthorised or otherwise fraudulent transactions, stolen product, or wrongful asks for a refund.

In accord with the Association of Certified Fraud Examiners, almost 60 percent of on-line businesses become a victim of fraud in some time in their business lifecycle.Aside from phishing and hacking, if you accept a fraudulent payment, then you could take place economically accountable for the loss. Having to cope with a fraudulent transaction — the chargeback process, and the possible hit to your company’s reputation — is unpleasant.

Fortunately, there are steps you can take to minimize your risk and protect yourself and your clients from on-line scams.

Types of Online Store Fraud

There are various kinds of online fraud, but they can be broadly categorized into the following:

Account takeover

Most e-commerce stores supply clients with accounts which store personal data, fiscal data and purchase history. Perpetrators frequently hack into these accounts through phishing schemes. In probably the most typical tactics, fraudsters send e-mails to trick clients into revealing passwords and usernames. They then log into your clients’ accounts, change the passwords and make real purchases.

Id theft:

Long after a data breach criminals can still use your personal info to open accounts, file tax returns, buy property in your name and more. Even though many businesses take several precautions to secure customer data, fraudsters still figure out how to hack into databases and steal usernames, passwords, credit card numbers along with other personal info.

Chargeback fraud

Chargeback fraud is among the simplest kinds of fraud and doesn’t necessarily involve id theft. A customer orders items from the internet site utilizing a payment system which can easily be pulled (think debit or charge card). Following the items are safely shipped or otherwise from the retailer’s control, the consumer initiates a chargeback, saying that their identity was stolen. They then keep the product at no cost.

Such e-commerce fraud is hard to discover because many individuals don’t check their credit card statements thoroughly and timely

Executing fraud prevention measures can be an effective when it comes to weeding out less committed or amateur criminals. The “right” policies will depend on your store, products and customers, but here are few you may want to consider:

  • Require buyer signature upon receipt of the shipment.
  • PCI Compliance-To help businesses protect themselves and their customers from online fraud, the Payment Card Industry Security Standards Council (PCI SSC) — a forum of global brands including Visa, MasterCard and American Express — has developed a set of best practices to safeguard consumer data.Complying with these standards, i.e. PCI compliance, is not optional for online retailers but is strictly enforced.
  • Limit the number of declined transactions you’ll run for a customer.
  • Consider not accepting credit cards from certain locations
  • Watch out for orders where the billing name does not match the address name.
  • Watch out for multiple orders from the same customer using different credit cards or same credit card for multiple orders.
  • Watch out for fake phone numbers and emails.
  • Watch out for IP addresses which don’t match with the country of the card issuing bank.

If you encounter customers, you can refuse to sell to them.

Implementation and Prevention of  fraud


If you’re ready to begin the application process for your merchant account, iPayTotal is here to help.

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