Part of having a successful ecommerce business involves being prepared for fraud. Here are fraud trends that ecommerce retailers should know about for 2022.
Does your company use card-not-present (CNP) transactions? Did you know that experts predict a loss of $130 billion by 2023 related to CNP fraud? Merchants must understand fraud trends to protect their business.
Keep reading to learn about the most prevalent fraud for eCommerce businesses today.
Bad players exploit different vulnerabilities to carry out their theft. The following provides an overview of the leading forms of fraud.
1. Buy Now, Pay Later Fraud
Buy Now, Pay Later (BNPL) described a “point of sale installment loan”. Instead of paying full price, the buyer uses interest-free short-term financing.
The BNPL company uses internal algorithms to quickly rate creditworthiness. There’s no formal credit check which increases risks. This makes it easy for criminals to use stolen credentials and account takeovers.
2. Synthetic ID Fraud
Synthetic ID fraud describes mixing real and fake personal data. They steal or buy Social Security numbers (SSNs), fake names, birthdates, and addresses.
Using synthetic IDs, they build credit over months or years. Once the credit rating is “good”, they take out large loans and disappear.
Criminals also lure victims by posing as “credit repair services”. The person gives their personal information to the thief. Hackers often give victims a credit privacy number that’s an unassigned or stolen SSN.
3. Friendly Fraud
Friendly fraud means falsely reporting unauthorized charges on an account. The company usually must refund the money.
Criminals use stolen credentials or reroute delivery of products to themselves. The victim requests a refund or chargeback because they never received the item.
Refund request delays make it hard to track friendly fraud. The victim usually doesn’t dispute the charge until they receive their bill. Thus, sellers lose income and some card issuers stop doing business with them.
4. Data Breaches
In the first three quarters of 2021, there have been 121 million victims of data breaches. Businesses fight the threat of phishing, ransomware, and email attacks daily. Increased eCommerce and data-feeding frenzies, raise risks higher than ever.
With data breach costs rising, high-risk companies face greater threats. In fact, 2020's chaotic events forced many businesses to close.
Fraud Prevention Solutions
Businesses must have a plan for improving digital security. The following gives a brief look at how to prevent fraud.
Use Big Data to Determine Your Risk
First, identify your vulnerabilities. Then work with experts to install the best protection for your business.
Install tools to respond quickly and effectively to identified fraud threats. Use solution experts to implement the protection your needs.
Preventing False Declines
Use reliable tools to identify fraud while preventing false declines. You must balance security and customer convenience. Cumbersome processes or false denials will cause consumers to leave.
Compare the customer’s IP address with other identifiers such as billing addresses. This can help find discrepancies that need further evaluation.
Set Purchase Limits
Sellers may set monetary limits for single transactions. Use reliable systems to check requests exceeding the limit to prevent false declines.
Choose Scalable Solutions
Quality fraud prevention systems grow and adjust to new threats as they emerge. Machine learning and artificial intelligence collect and evaluate data based on algorithms. They alert the administrators as soon as they detect irregularities.
Do You Need Fraud Protection?
This article described today’s fraud trends. Vesta offers the only instant, end-to-end transaction guarantee platform for online sales. We use machine learning to reduce false declines, chargebacks, and other fraud.
Our proprietary graph database checks 2 trillion data points for accurate risk assessments. You’ll safely approve 97 percent of transactions. We also offer 100 percent fraud coverage.
Visit our eCommerce Solutions product page today.