Ecommerce has created many ways for billions of people to make transactions. Success for online businesses still hinges on their ability to shield themselves and customers against payment fraud. Six months into 2021, cybercriminals in the United Kingdom (UK) stole a total of € 911, million through payment fraud. The good news is that advances in technology equip businesses with tools to counteract the effects of payment fraud. However, the double-edged sword, this progress also gives cyber thieves a leg-up. They’re able to exploit software, electronic communication, and other avenues to take the hard-earned cash of both consumers and merchants.
Four frequently occurring types of payment fraud
Our introductory blog explained and broadly discussed different kinds of payment fraud. Additionally, Eric, our fictitious character’s unfortunate circumstance was shared as a cautionary anecdote for all businesses, big or small.
To keep you alert on payment fraud trends and how to reduce these criminal incidents in your business, we’ve identified four main cybercrimes.
1. Website takeovers
The takeover of an entire ecommerce store is not uncommon. Fraudsters use a plugin or an app to hack a business’s website. The outdated plugin gives them access to company information. The criminals are able to take over the company’s most important digital asset (website) and are exposed to sensitive customer data.
Thieves take customer banking details, credit card information and other payment information. What’s worse, they may redirect all transaction activity to a fraudulent account.
Frequent audits of your online store, its apps, and plugins, will help deter hackers, and changing access information also makes takeovers difficult to achieve.
2. Password hacking
With the vast majority of Gen Z and Millennials using banking apps, password hacking victims tend to be young online users. Growing ever-more sophisticated, password and code hacking is achieved through many strategies, but mainly via special algorithms. These techniques target websites that process their transactions online
The use of tokenisation enables customers to make online payments on your website, without transferring their payments details to your website. The sensitive information is instead encrypted and disguised as a random set of characters. This makes consumer data highly difficult to intercept. Even when intercepted, the data is more likely to remain secure.
3. Payment interception
Known as “man in the middle fraud”, this cybercrime often happens over emails. It happens when bank account details are switched, so the money is diverted into a different and incorrect account. Payments are intercepted during the sales process. It’s not isolated to credit cards but can be performed over social media platforms and e-wallets as well.
Start by applying two-factor authentication for customers to login to any systems in your business that contain sensitive information. This is especially important during the checkout process as this is the point where your online environment is most vulnerable to interception. You should provide customers with a clear password policy along with practices they can apply to ensure their password safety.
4. Refund fraud
A type of scam where a person buys from an ecommerce store with the intent to return the item for money or other goods. Often the products or services were obtained illegally or are damaged. Refund fraud can increase your business’s chargeback rate. This doesn’t only affect your business’s reputation, but can also lead to the termination of your merchant facility used to take payments.
Using a payment gateway that integrates with Google Pay, Apple Pay, and PayPal or other payment methods that allow refunds is a good way to lower scams. However, the risk constantly remains.
Although growing, the global effects of payment fraud in the industry are limited. Across the entire industry a small fraction of online sales turn out to be fraudulent. Still, it’s important to consider the various tools, and tactics available to reduce its consequences in your business. Convenient payment processing solutions, such as Truevo’s, must be integrated with a host of other tools and practices that ensure industry security compliance.