Fraud Analysis and Prevention
page last edited on 03 December 2018
Every online store owner dreams of being successful and having a well-recognized brand. However, the more popular your brand is, the more likely it is to become a target of online fraud.
Online fraud can be of several different types and you need to protect yourself from each of them.
The first one, most common, is a so called Friendly Fraud that in fact is nothing but a cheating customer. A Friendly Fraud happens when a customer purchases a product with their own credit card, and issues a chargeback (in some cases deliberately), claiming an item was never received or that they never made the charge.
To prevent a friendly fraud make sure your credit card descriptors match your business name. A lot of times, chargeback fraud happens because customers don’t recognize the company name on their card statements. So please check your company details’ settings once again.
Also, if you can, only use shipping with tracking provided by most of carrier companies. In case customers approach you asking for a refund, it’s the best evidence you can provide to prove the products were delivered to their door.
The best way to protect yourself from fraud is to avoid chargebacks at all costs and prepare for when it happens.
Next fraud type you need to protect your store from is Clean Fraud. The basic principle of clean fraud is that a stolen credit card is used to make a purchase, but the transaction is then manipulated in such a way that fraud detection functions are circumvented.
So you better keep an eye on any suspicious orders coming your way. Being equipped with the necessary tools is key in everyday fraud management.
Many payment gateways, such as PayPal powered by Braintree, come with basic fraud tools such as AVS (Address Verification System) and CVV (Card Verification Value).
In case using X-Payments or Braintree is not your option for some reason use at least a biult-in AntiFraud Service Connector to monitor your accounts and transactions for red flags such as inconsistent billing and shipping information, as well as the physical location of your customers. X-Cart AntiFraud allows to track customer IP addresses and alert you to any addresses from countries known as a base for fraudsters.
In combating fraud, don’t forget to think about the customer and ensure their experience isn’t compromised. Blocking suspicious purchases without detailed evidence can lead to an increase in cart abandonment. Keep both your business and your customers safe, and reduce your chances of losing revenue and drowning in chargeback fees.
Account Takeover Fraud
The third fraud type you should be aware of is the Account takeover fraud that is a form of identity theft, wherein a criminal gains access to a registered customer’s account and poses as that known and trusted shopper.
To prevent accounts takeover and protect your customers use Two factor authentication that will level up protection to user accounts by adding a necessity to confirm the username and password with a one-time SMS code to log in. Even if Authy server is compromised, the hacker will have no usernames or passwords, as these sensitive details are NOT stored on their side.
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