Nov 19, 20184 min read

How to minimise the risk of online fraud on your website.


Credit Card Scams

When it comes to not getting paid for the products or services you offer, the most significant problems will be caused by credit card issues. Identity thieves can steal payment card information from unsuspecting consumers and then use this to make online purchases.
Once credit card fraud is detected by the legitimate card user, the cash may be refunded to them by their provider. But the site that accepted the fraudster’s payment may end up facing reputational damage, in addition to the loss of stock which ends up in the hands of a malicious third party.

Charge-back Exploitation

The likelihood of not getting paid following an e-commerce transaction has increased as a result of the fraudulent exploiting of regulations governing consumer rights. The charge-back scheme, for example, to which a number of banks and financial institutions subscribe, can allow individuals to claim back money spent on a debit or credit card provided that it is under a certain amount. This system is in place to ensure consumers are reimbursed if they are dissatisfied with a product or service for which they have been charged. This can include situations in which goods are damaged, differ from the seller’s description or are never actually delivered. Of course deception is possible because a customer can take receipt of a product ordered online and then simply claim that it has not actually arrived at their address, leading to issues for the e-commerce site. Furthermore, the rights ensuring that customers can return products they have ordered in order to get a refund represent further opportunity for fraudulent exploitation. Bogus returns, in which a legitimate product has been delivered and a fake version is returned to the retailer, are all too common.

Pre-Emptive Measures

Thankfully there are opportunities for retailers to protect themselves from common scams and many of the risks inherent in the e-commerce market. Firstly it is important to look for obvious irregularities in ordering habits which may suggest that a buyer is exploitative. These may include orders which are placed late at night during hours in which mainstream customers would be unlikely to be active, in addition to orders which are for a high quantity of a specific product or at the upper end of the price scale. In essence it pays to be cautious about any “out of profile” activities. The email address used by the customer to log into your site and place an order will also be a good indication as to their legitimacy. Addresses which are either linked to no-name providers or email hosting firms which are outside of the mainstream can be a bad sign, as can those that do not actually feature the name of the buyer. Email addresses that are just a string of letters and numbers are often a sign of randomisation, designed to make identity detection difficult. The shipping address will also be important. If an item is being delivered to a party based overseas but the billing address is an entirely different, domestic address then there is a far higher risk of fraud occurring. Using a mainstream courier firm and requiring signed-for delivery will further mitigate the risk of charge-back scams. Planning, preparation, common sense and fraud prevention policies can minimise the potential risks facing online retailers.