How e-Commerce Merchants Detect Online Fraud?

Monday, June 24, 2019, 6:00 AM | Leave Comment

Digitalization has given birth to new opportunities for doing business- E-commerce.

As we all know every new opportunity brings new challenges with it. Preventing online fraud is the biggest challenge faced by e-commerce sites.

With time, there has been an exponential increase in online fraud cases. Criminals use highly sophisticated techniques to conduct online crimes.

Preventing such frauds and security of customer’s financial and personal details has become a significant challenge for many e-commerce businesses.

How e-Commerce Merchants Detect Online Fraud?

Let us understand what online fraud is?

An illegal activity wrought by a criminal on an internet site falls under the category of online fraud.

Online fraud may result in any of the following:

  • Identity theft

  • Fraudulent transactions

  • Wrongful refund or request

  • Stolen merchandise

Online businesses have to suffer heavy losses because of such scams. Moreover, the responsibility of online transactions lies on the shoulders of e-commerce websites and credit card companies have cleared that they have no role to play in online transactions.

E-commerce companies take every step to make sure that the payments are made by the cardholders only.

However, validation of the real customer is a challenge in itself. Hence, having complete knowledge of how to detect online fraud becomes very important for all kinds of e-commerce sites.

Tips for detecting online fraud

  • Use the address verification service (AVS)

    AVS is an automated online fraud prevention system. It helps in reducing fraudulent dealings. AVS works on a principle of comparing the address provided by the buyer with the address mentioned in the data of the issuing bank. A mismatch in AVS data might be the result of a fraudulent transaction. Criminal might have got access to the card details of someone, but had limited access to the cardholder’s personal information, hence the address mismatch.

    However, an AVS mismatch cannot be considered as a sure shot proof that the transaction conducted is fraudulent in nature. It can be taken as a sign that you need to double check the transaction.

  • Location, Location

    One of the easiest and simple way to check the authenticity of the transaction is to compare all the three locations of the transactions. If the location of the IP address, shipping address and the billing address are closer to each other, the chances of the authenticity of the transaction become quite high. If the distance between these locations is very high then maybe you need to do all the checks before confirming the order.

  • Inconsistent order data

    Inconsistency or discrepancy in the details provided by the customer is the basic and most common indication of a fraudulent transaction. These discrepancies can be of any type like a mismatch between city and zip code, or e-mail address does not line up with the IP address. Chances of genuine customer making such mistakes are quite less as compared to a cyber-criminal. Hence, it’s always better to check the order for other risk factors. A little precaution may help you in preventing fraudulent transactions.

  • Use of IP Proxies

    In order to prevent their transactions from getting caught, web-criminals try to mask their IP addresses. This would make the detection of location quite difficult. The solution to tap such kinds of frauds is to use tools which would help you in finding whether the IP address used is legitimate or not.

  • Three most common online fraud prevention tools:

    There are numerous fraud preventive tools available in the market. Some of the most popular and effective tools are discussed below:

    1. Signifyd runs store’s backend

      As per “freedom debt reviews,” one of the best ways to prevent and detect an online fraud is by hiring a professional firm to keep a check on such transactions that too without compromising on customer’s experience. Signifyd is a professional firm which is known to provide solutions for all types of online frauds. The company with its solutions helps e-commerce companies to increase their sales without worrying about fraudulent transactions or chargeback costs. The company takes the full onus if any of their guaranteed orders turn out to be a fraudulent transaction.

    2. Simility is “fingerprinting” device

      Another well-known company to provide a solution for preventing online fraud is Simility. Solutions provided by Simility helps in preventing online frauds related to new account fraud, payment fraud, referral, and promo abuse and delivery related frauds. Simility helps in uncovering similar fraudster devices. With its fingerprinting device, it helps in identifying seller/buyer collusion by identifying unique mobile or other devices. With its proprietary algorithms, it helps to determine the chances of fraud for any kind of device.

    3. Kount is a full online-fraud management tool

      Kount is considered as one of the most trusted fraud preventing tool for enterprise-level websites. It has succeeded in providing specialized solutions for various e-commerce websites. It is known for using the most advanced fraud preventing technologies including AI. Besides being reliable, this tool is known for its response time. It takes just 300 milliseconds to either approve or un approve a transaction.

    The threat of online fraud is increasing with every passing day. Besides financial losses, e-commerce companies tend to lose the trust of their customers. The safety and security of customer’s details is an enormous responsibility. Hence, by using some of the tools mentioned above and you can save your site from online fraudsters that too without having any effect on your sales.

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