eCommerce Tips & Trends

Preventing eCommerce fraud


by Jules

On 2019 M03 5

by Jules

Whenever there's money involved, there's a chance for fraud. And, with eCommerce becoming more popular, unfortunately the industry is not immune to fraudulent activity.

With eCommerce fraud increasing annually, and the holiday season coming up, online businesses should look into taking precautions that will help minimize the opportunities and chances for fraud.

Who is prone to eCommerce fraud?

Stores that offer payment by credit cards are always a target for eCommerce fraud. However, pre-paid gifts card are now being targeted as well.

eCommerce fraud can happen to you any time of the year, but the holiday season and other busy shopping times are when you are the most vulnerable. According to ACI universal payments there's been a 22% increase in fraud in the 2017 holiday season alone.

The reason for this is that due to a large number of transactions that are happening, it's possible to overlook a fraudulent transaction or not have the resources to provide the same type of scrutiny to orders as you would on a normal day.

According to the Association of Certified Fraud Examiners, 50% of small eCommerce businesses face fraud at one point or the other. While it's difficult to fully prevent your business from fraud, at the very least you can make efforts to detect it with various tools.

What are the types of fraud in eCommerce?

Phishing / clean fraud

This technique is commonly used by cybercriminals throughout the world. The cybercriminal pretends to be an eCommerce company and gets personal information from the customer. This kind of fraud usually needs some technical knowledge and capability.

Purchases made through the credit card numbers and other information acquired through this theft can cause chargebacks from the eCommerce stores. Chargebacks cause a huge loss to the eCommerce businesses, especially small and medium ones.

Friendly fraud / casual fraud

Here, the customer makes a purchase, but for some reason (maybe too many charges or a lot of time elapsed) they forget about the purchase and request the payment processor or the merchant for a chargeback.

While fraud itself is neither friendly nor casual, one can say this is not done with some serious intent but instead, due to a misunderstanding or forgetfulness.

Businesses that have subscriptions and registrations are usually affected by this, as customers sometimes forget that they opted for a paid subscription.

Middleman fraud

This fraud is a bit similar to hacking. Once the customer tries to make an order on a store, they may contact the owner via email and share personal and payment details there.

Somehow, a third, uninvited person intercepts this email and steals this personal information, with both parties unaware that details have been compromised.

Identity theft

Many cybercriminals and thieves have acquired the latest and innovative methods to steal identities. Data hacking, stealing of mobiles and tablets, and using malware are ways data is stolen. This data is then used to make fraudulent purchases. eCommerce businesses end up having to face multiple chargebacks and face huge losses.

How can sellers stay safe from eCommerce fraud?

As they say, prevention is better than cure, so taking measures beforehand can save you a lot of trouble. eCommerce fraud prevention can start out by taking steps to ensure that every transaction you see is genuine.

  • Find a good fraud protection system and always make sure it's updated. There are many useful tools available in the market. This small investment can literally save you millions in the long run.
  • An eCommerce fraud prevention system that uses both human and AI resources is best. Sometimes the cybercriminal can find loopholes in a computer system, but human intelligence can step in and realize what's happening.
  • A good verification system is also required for eCommerce fraud prevention. An address verification system is highly recommended. The address of the person claiming to own the credit card is verified against the credit card address.
  • Since email fraud is considered to be very common, a good email authentication system is a must. This will tell you if the email has anything untrustworthy in it.

    You can send your customers an email with an authentication link in it, but make sure you are trusted by your customer and don’t end up in their spam folder.
  • Device assessment is also a useful way to identify actual human interaction from a bot or fake interactions.

Tools for eCommerce fraud protection:

There are many tools available that assist with eCommerce fraud prevention, detection, and protection. Consider the following for your store:


Subuno is a very effective tool which offers customization, chargeback guarantee, and an insights dashboard. It supports all major eCommerce platforms including Shopify, Magento, and WooCommerce. They give a free 30-day trial with paid plans starting from $19 per month.


Bolt is a next-generation fraud protection tool which aims to take care of all aspects of your eCommerce needs. It gives you 100% protection against fraudulent chargebacks and complete protection against fraud. You can accept all customers easily and without any fear, allowing you to grow your business. Since they give customized solutions you'll need to request a quote.


Simility is card fraud detector and works for both mobile devices and desktops. It uses the latest technology in device fingerprinting to detect fraud. Even if the device is updated it can detect if two fingerprints belong to the same device or not. This way, fraud from a device or system is detected and prevented with ease. The price is dependent on the amount of transactions you have.

If you have any tips or tricks to avoid eCommerce fraud, do let us know in the comments below!