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E-commerce Fraud | Common types and methods of protection and confrontation

08.09.2022 03:35 AM
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E-commerce Fraud | Common types and methods of protection and confrontation
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E-commerce Fraud | Common types and methods of protection and confrontation

Electronic fraud in the field of online ecommerce cost store owners and retailers during the year 2020 alone, losses estimated at about $32.39 billion.

This value has tripled over the years since 2011, from an estimated $9.84 billion.

These losses are expected to rise significantly to reach $40.62 billion by 2027, 25% higher than in 2020.

This is only on the e-payment front, and without addressing the other common types of online fraud that cost ecommerce pioneers and retailers billions of dollars annually.

What is electronic fraud?

Electronic fraud in general is any form of deception, exploitation and illegal electronic attacks in which Internet users fall by individuals or organizations.

According to these scams, fraudsters penetrate any of the websites that users visit, whether chat rooms, blogs, e-commerce stores, or even smart mobile applications, with the intent of stealing users' personal accounts as well as their banking and credit data.

It is any kind of unlawful attack on customers' personal accounts or their banking data and information on online stores.

Which is usually what happens when you shop at the store and use their credit cards to make purchases.

The use of a stolen or counterfeit credit card, the use of a false identity, and affiliate advertising fraud are among the most significant forms of fraud that occur on online retailers.

All of which, of course, negatively impacts your user experience as well as your store's overall profit.

And fraud in e-commerce has many types and forms, it is not a requirement that fraudsters have succeeded in stealing your customers’ bank or other data, while the customers themselves do it.

Such as Friendly Fraud, in which the customer intentionally refunds his payments after completing the transaction in order to get the product or service for free without paying for it, and other types of which we will learn about in a separate paragraph.

What types of e-commerce fraud are common?

1.    Identity Theft scam

2.    Friendly Fraud

3.    Clean Fraud

4.    3D Triangulation Fraud

5.    Merchant Fraud

6.    Affiliate Fraud

A good ecommerce fraud solution allows you to sift through all your customers’ data to find suspicious fraud patterns. With basic tools, that data is fed through risk rules. For instance, a rule can state that IPs from blacklisted countries will not be able to go through the checkout.

But because fraudsters adapt to your solutions and can learn to circumvent your risk rules, it’s important to anticipate new attack vectors before they damage your ecommerce.

This is why fraud detection with machine learning such as SEON’s can analyze hundreds of data points and identify connections between cases of fraud. It will then suggest rules that you can deploy to block online payment fraud, friendly fraud and other attacks as soon as possible.

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