No company or person wants to be the victim of fraud of any kind. However, when it comes to eCommerce, the impact of this type of crime can be devastating. The relative ease with which criminals can run their schemes online and the damage they can cause make eCommerce fraud exceptionally dangerous.
It has been found that nearly 60% of small businesses that suffer a cyberattack end up closing their doors within six months.1 That’s because every dollar lost through these attacks can translate up to more than $3 in residual effects.2 Given how serious this threat is, businesses of any size must be aware of and prepare for all the various types of fraud they may encounter.
Exposing Fraud Techniques
There are several ways criminals can take advantage of your eCommerce platform. For instance, they can steal a customer’s credentials to purchase big-ticket items using stored credit card numbers and have them shipped to a different address. They can overpay for an item with a stolen credit card and ask for a refund to be paid to a separate account. One common issue is when thieves use someone else’s credit card to make small transactions to make sure the account is still valid. Even though the amount charged is tiny, you may be on the hook for significant authorization fees, depending on how many cards the criminals test on your merchant account.
Protecting Your Business
Although there are countless ways a criminal can attack you online, there are many methods you can use to help protect your enterprise. For example, utilizing an HTTPS site for your platform provides an extra level of security that will help deter many thieves looking for an easy target. Keeping an eye out for very small transactions is another effective means of being on your guard, as card testing accounts for a significant percentage of all online fraud.
Of course, having a secure infrastructure is a key line of defense for you and your customers. With your eCommerce platform, this means using SSL certificates, encrypted payment gateways, and fraud management tools, such as Address Verification Service (AVS). Requiring customers to create logins and establish strong passwords and two-factor authentication also helps cut down on the risk to your business.
Being prepared for any type of fraudulent transaction is critical if you want your company to survive. To learn more about various kinds of eCommerce fraud and how to help guard against them, take a look at the accompanying resource.
This information is provided for informational purposes only and should not be construed as legal, financial, or tax advice. Readers should contact their attorneys, financial advisors, or tax professionals to obtain advice concerning any particular matter.
1 “60 Percent of Small Businesses Fold Within 6 Months of a Cyber Attack. Here’s How to Protect Yourself,” Inc., 7 May 2018
2 “CNP Fraud Costs US Merchants $3.36 for Every $1 of Direct Fraud Loss,” CardNotPresent, 30 July 2020