Organizations have considerable time this year to review their capacity to combat online fraud because of the growth in eCommerce expenditure volumes and the requirement for greater security on digital channels.
Worldwide eCommerce losses from digital payment fraud were projected to reach $20 billion in 2021, up 14% from the $17.5 billion the prior year.
Several businesses may have made significant technology investments to enhance payment fraud detection over the past months. Yet, cybercriminals have also developed new attack strategies to keep up with technological improvements; therefore, it is important to integrate and implement a payment fraud detection solution that not only provides protection and security to the organization against various frauds but also with changing fraud tactics from cybercriminals can fight and prevent frauds to the company.
Let us look at some of the most popular strategies fraudsters employ to steal consumers’ identities and credit card information to assist you in addressing these new issues.
Account Takeover Fraud (ATO):
Account Takeover Fraud (ATO) grew significantly in 2021 due to the vast amount of stolen passwords made available on the dark web, largely due to the fact that so many people repeat passwords across so many accounts. If a fraudster gets legitimate login information, they can check it on numerous websites, look for accounts that match and then take control of those accounts to make purchases using the associated payment methods.
Companies can prevent ATO fraudsters by checking every order for signs of fraud, even if it appears to be from a regular client. A multi-factor authentication solution is the most effective method for preventing ATO fraud in your company. Implementing a fraud protection technology based on automation and machine learning will also help you stop fraud.
The epidemic has accelerated the growth of return fraud, often known as friendly fraud. This kind of fraud is committed by users who use a credit card to make a payment but then make up stories about how their product or order was not delivered, damaged, or significantly different from what was advertised online.
Both brick-and-mortar retailers and eCommerce stores are affected by the trend. However, online returns can vary from 25% to 40%, while in-store returns are often in the single-digit percentage range.
Clear product descriptions, images, and delivery tracking through the warehouses to the customer door can all help to thwart friendly fraud.
New Accounts Fraud
Synthetic identity fraud is another name for this kind of scam. Instead of adopting a single person’s identity, the fraudster fabricates a synthetic identity by fusing data from numerous consumers.
Hackers register accounts or go on shopping binges using these false identities, charging the person whose name corresponds to the bill. Criminals have already gotten around to biometric verification using technology that blends face features.
Checking the new user’s email, phone number, and credit or card accounts is necessary to detect this fraud. Delivery addresses can also be compared using a database of locations where well-known crooks collect stolen products.
It’s also essential to employ the payment fraud detection software solution to examine any orders reported recently because many consumers started shopping online after the outbreak. Hence, real-time data and information regarding flagged data might aid e-commerce enterprises in making better decisions about whether an order is legitimate or the result of fraud. This can result in significant revenue savings.
Before using the stolen payment information to make larger purchases elsewhere, cybercriminals would sometimes conduct “card testing” by making a tiny test purchase on an eCommerce website. When the card is denied, thieves use this technique to determine which information is inaccurate.
By integrating address identification verification with CVV testing and prompting users to provide the three-digit security key on their cards, fraudsters can be deterred from engaging in card testing fraud. Implementing CAPTCHA difficulties and putting a cap on the total number of transactions that can be made in a given period of time is also an excellent suggestion.
Fraud with Buy Now, Pay Later (BNPL)
As the “buy now, pay later” (BNPL) business model gains acceptance; scammers are skilled at taking advantage of it. They can also use the other strategies mentioned above, such as account takeovers and synthetic fraud, to make purchases utilizing a BNPL option at the checkout. After that, the fraudster either leaves without paying for the products or makes a purchase using stolen credit card data.
The key to solving this problem is having the proper identity and fraud protection on all their websites and applications. Quick and thorough fraud reporting helps stop additional fraud attacks.
The Requirement For A Fraud Detection Solution
The preceding actions ought to be taken to avoid eCommerce fraud. It won’t be enough to stop online fraud in the long run. Too many alternative strategies are available to cybercriminals since new dangers emerge daily.
You must invest in a fraud screening system to stop and lessen fraud. Protection from fraudulent transactions for your digital and mobile channels with a payment fraud detection solution.