Ecommerce Fraud Overview

When shopping online, it’s essential to understand how to spot fraud. Fraudsters make multiple purchases in a short time, either in a single day or over an extended period. These tactics are known as “triangulation” and include push payment and refund abuse. While most of this fraud is hard to detect, there are ways to spot it and avoid becoming a victim. Here are some common tips to protect yourself from online fraud.

Triangulation Fraud

A chargeback is a fraud that involves reversing payment from a customer’s credit card to a fictitious website. This fraud is particularly damaging to a small business, which often has limited profit margins and few defenses against fraud. In addition, even the most sophisticated fraud prevention software is out of the reach of a small business. Instead, merchants can take simple steps to protect themselves and their customers.

The first step to avoiding this fraud is to know the facts. Some people are unaware of the scam and thus will leave positive feedback for a fraudulent seller. For instance, the seller may make several small purchases before making a large purchase, so the buyer will not know they are paying for counterfeit merchandise. The buyer may not even realize that they have been scammed. This type of fraud can lead to chargebacks, which can be a big problem for an ecommerce merchant.

Push Payment Fraud

A new form of ecommerce fraud is popping up daily – authorized push payment fraud. This fraud involves separating the cardholder from the money, and it is straightforward to become a victim. Because push payments do not require the customer to enter personal details, it is easy for fraudsters to game the system. Authorized push payment fraud occurs when the customer authorizes the merchant to transfer money to a third-party account.

These fraudsters target people through social media, mobile games, and online shopping sites. They may convince online shoppers and gamers that they are paying for a rare item or persuade them to buy a fake product. Social media scammers spend months grooming their victims through online conversations. They will ask for money for a phony emergency or promise a legitimate service or product. Unfortunately, it can be hard to distinguish a fake from a legitimate website.

Refund Abuse

Refund abuse is a problem that can cost merchants money. Customers pay up to 60% of the return merchandise cost through chargebacks. Refund abuse often goes undetected because customers aren’t aware they’ve abused a merchant’s return policy. Even if merchants know of an issue, it isn’t easy to detect and prevent. To combat refund abuse, merchants should implement robust fraud detection and customer service.

The difficulty of detecting refund abuse is that it’s often carried out by paying customers who bypass most forms of fraud prevention. The problem can also be very profitable for merchants, making it essential to identify refund abusers as soon as possible. In addition to identifying abusive customers, merchants must monitor refund activity to learn which products attract the highest refund abuse. While this is not always possible, it can be a helpful tool.

Friendly Fraud

There are four common causes of friendly fraud like cnp fraud in ecommerce. Some of these frauds are honest mistakes, but others are deliberate. Liar-buyer fraud and INR abuse are examples of deliberate fraud. In the latter, customers purchase a product and then claim that they never received it. These customers then bypass the merchant and file a chargeback. It is considered a policy abuse tactic. If you suspect a transaction could be fraudulent, use the following tips to avoid it.

First, know what to look for. For example, the transaction is likely fraudulent if the customer’s shipping address is the same as their billing address. Second, don’t allow the same customer to make multiple purchases using a single account. This will reduce the number of fraudulent purchases and the chances of chargebacks. Finally, you won’t have to worry about friendly fraud if you have a good reputation.



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