In the first quarter of 2018, U.S. retail ecommerce sales totaled $123.7 billion, an increase of 3.9 percent (±0.7%) from the fourth quarter of 2017. As a business owner, there are benefits to selling your products or services online, but there’s also a potential for ecommerce fraud. How can you sell online and protect yourself from ecommerce fraud?
What Is Ecommerce Fraud?
Ecommerce fraud occurs when a criminal uses fraudulent means—like a stolen or fake credit card—to purchase something online. Although chip-enabled credit cards were developed to minimize fraud, chip technology does not help with card-not-present transactions, or transactions where the cardholder does not physically present the card.
According to a 2018 Identity Fraud Study, card-not-present fraud is 81 percent more likely than point of sale fraud. That’s because ecommerce fraudsters can fly under the radar by taking over a real customer’s account and having the merchandise shipped to another address. Just a single compromised username and password can lead to multiple fraudulent purchases.
How to Protect Your Online Business From Ecommerce Fraud
If you process payments online—without physically seeing the customer’s credit card—here are a few ways to protect yourself.
Always use an Address Verification Service (AVS). AVS authentication verifies that the physical address entered by the consumer is associated with the credit card account. When a consumer makes a purchase, the address they submit is compared to the address on file with the bank. This is one way to ensure that suspicious transactions are declined before they are processes.
Unfortunately though, some criminals can even fool fraud detection tools. Transactions known as ‘clean fraud’ can look like valid transactions with real shipping, billing, and IP addresses, along with verified card information. If this is the case, there are still red flags you can look for:
- Orders that are significantly larger than your typical sale
- Multiple transactions from the same IP address
- Fast, overnight shipping
- Large quantities of a single product
- Multiple transactions in a short amount of time
Although ecommerce fraud is on the rise, there are ways to protect your business. Always use AVS authentication and watch for abnormal online purchases.
Electronic Merchant Systems is a leading provider of payment processing & merchant services. For more information please visit our website.