It is an unfortunate reality that scammers take advantage of crises like COVID-19, using the world’s distraction to their advantage. With more consumers shopping online than ever before, e-commerce fraud attempts have been off the charts. Compared to 2019 data, most sectors of retail saw a dramatic rise in transactions during March 2020, with Europe and North America in the lead for ecommerce fraud. For this reason, it is more crucial than ever that merchants learn the most up-to-date strategies and best practices for keeping scammers at bay.
Preventing Ecommerce Fraud Practice #1: Be Proactive about Identity Theft
As the most common type of ecommerce fraud, identity theft warrants special attention. Business identity theft threatens not only the financial health of the company, but the livelihood of its employees and customers.
Along with standard precautions like keeping personal information private, merchants need to go the extra mile. Simple safeguards can help:
- Switch to digital statements to avoid mail fraud
- Keep paper documents locked away
- Use a secure VPN
- Avoid letting employees share company passwords
- Keep an eye on your business’ credit reports.
Preventing Ecommerce Fraud Practice #2: Use Address Verification (AVS)
Some credit card processors offer address verification services (AVS) to alert merchants of potentially fraudulent transactions. When the location where a card was issued does not closely match the customer’s billing address, merchants can decide whether to accept or reject the transaction based on the AVS code provided. While not sufficient on its own, AVS is a useful tool in conjunction with other ecommerce fraud prevention technologies like CVV validation and IP address verification.
Preventing Ecommerce Fraud Practice #3: Have Your Response Planned Out
Merchants are wise to decide on a plan of action before a suspicious transaction occurs. Depending on the type of fraud, a small business may need to freeze its credit, cancel or dispute a transaction, or take steps to protect its data. Studies show business owners detect fraud an average of 16 months later, leaving them with limited options to respond. Small businesses take a bigger financial hit than larger organizations that encounter fraud because there are typically fewer internal controls in place. Scheduling regular internal or external audits is one way to break this cycle.
Preventing Ecommerce Fraud Practice #4: Take an Industry-Specific Approach
Different industries deal with different flavors of fraud, and online sellers need to be especially careful with credit card transactions. Thus at the heart of ecommerce fraud prevention is transaction monitoring. In addition, merchants can mitigate confusion and deter fraud by being clear and communicative before, during, and after the checkout process. When scammers see a small business with crystal clear refund policies and a super-secure checkout process, they are less likely to try getting away with fraud.
Preventing Ecommerce Fraud Practice #5: Comply with PCI
The Payment Card Industry Data Security Standard (PCI DSS) is a requirement for all businesses allowing credit card payments. While it may seem like a tedious hurdle to jump, PCI compliance is designed to benefit businesses and protect them from data breaches.
Processors like NMA provide PCI compliance services to help merchants guarantee they are conducting business safely. In addition, NMA helps merchants set up quarterly scans to uncover security weaknesses in their system. Much like car insurance, PCI compliance is a small monthly investment that offers a hefty layer of protection.
Preventing Ecommerce Fraud Practice #6: Use CVV Verification
Card verification value (CVV) codes are fundamental elements of a secure checkout process. Depending on the card type and provider, they may also be referred to as CVV2, CVD, CVC, or CVC2. Requiring these codes during checkout prevents identity thieves from using credit cards they don’t physically have in their possession.
Some merchants fear that requiring CVV codes will reduce conversions and complicate the checkout process. However, there are many other ways to simplify checkout without taking a security risk.
Preventing Ecommerce Fraud Practice #7: Use a Fraud Protection Service
Fraud software is rapidly becoming a necessity for online sellers who don’t have the time or technology to closely monitor each transaction. With the help of AI and machine learning, fraud solutions are more sophisticated than ever before. Predictive and adaptive analytics techniques are allowing businesses to receive vital information before they process fraudulent transactions.
Fraud Wrangler is a security service for merchants who want to reduce chargebacks and detect fraud immediately. Fraud Wrangler’s five-layer system gives merchants the best chance of winning transaction disputes and keeping rightfully earned revenue.
Preventing Ecommerce Fraud Practice #8: Know the Red Flags
Every industry has its own red flags – occurrences that are statistically more likely to coincide with fraud. In the ecommerce world, these are:
- Several orders of the same item
- Different shipping and billing addresses
- Multiple orders with different credit cards
- Suspicious email addresses
- Several declined transactions
In the end, detecting fraud requires merchants to use their gut instinct. If something doesn’t feel right, it probably isn’t. Sometimes fraud prevention is as simple as sending a quick email to a customer or checking them out on social media. The more red flags a merchant encounters, the more likely it is to be a dangerous transaction.
Fraud costs small businesses billions of dollars per year, and most of the time it is avoidable. By using common sense, online safety measures, and fraud prevention software, merchants can get ahead of fraud trends in 2021.
Fraud Wrangler provides a powerful suite of protection tools to help merchants stop fraud before it impacts their business. Sign up today and take action to protect your hard-earned revenues!