eCommerce Fraud on the Rise – Why All Vendors are Looking for Ecommerce Fraud Prevention Software?
Over the
last decade, the growth of eCommerce as a global industry has been
astronomical. Researchers predict that by 2022, the global eCommerce industry will
grow six times quicker than traditional retail stores. While that’s
exhilarating news for anyone involved in eCommerce, there is a major downside
to this rise - the growing hindrance of eCommerce fraud and abuse of online
shoppers.
Recent
reports claim that the eCommerce industry will generate $630
billion in
revenue and lose $12 billion due to eCommerce fraud in 2020. In addition to the
actual dollar value lost because of fraudulent transactions, merchants also
have to deal with legal expenses, interests, chargeback dispute fees, the cost
of replacing merchandise, and other expenses.
Thwarting Payment Fraud
Initiatives
such as the EU’s PSD2
(Payment Services Directive II) and the PCI-DSS (Payment Card Industry Data
Security Standard) aim to hold vendors to strict data security standards to
prevent fraud. Vendors are encouraged to leverage several types of security
technology while facilitating online transactions. However, when one type of
online fraud is thwarted, others pop up within months. That’s why
vendors are looking for eCommerce fraud prevention
software that uses Machine Learning (ML) or Artificial Intelligence
programs to keep up with the cybercriminals who won’t stop
finding new ways of perpetrating fraud. These advanced software tools stop
cybercriminals as soon as they visit online stores. These tools prevent online
vendors from falling prey to frauds like -
Distributed Denial of Service (DDoS) Attack
In
Distributed Denial of Service (DDoS) attacks, online stores’ servers
get inundated with requests from thousands of undetectable IP addresses.
Hackers manipulate the IoT (Internet of Things) devices the store is connected
to. The flooding of attacks can cause websites to go completely offline. While
they’re
offline, hackers execute even more brutal attacks, such as data theft, malware
infection, etc.
This devastating form of cyberattacks is increasing in numbers as hackers target
peak shopping seasons every year. These attacks cost online businesses $20,000 -
$40,000 per hour on average. As of 2020, there have been 17 million DDoS attacks across the
world. The highest price businesses that are victims of DDoS attacks have to
pay is the loss of reputation and customer confidence. eCommerce sites need to
use the latest fraud prevention software tools to keep their online stores
prepared for such attacks.
Credit Card Fraud
Unlike
most types of cyber-fraud on this list, everyone’s aware of how damaging credit
card fraud can be to eCommerce sites and customers. Despite strong efforts to
thwart these types of crimes from banks, payment service providers informed
customers, and vendors, credit card fraud continues to thrive mainly because
it's nearly untraceable.
The best
that eCommerce stores can do is detect suspicious transactions right at the
onset. Having the latest fraud detection tools on the store is vital,
especially if it processes hundreds or thousands of transactions every day.
Bot Attacks
The
internet is full of automated programs programmed to execute specific tasks on
websites, or in other words – bots. It’s impossible for online stores not to come across or even
use bots. Modern-day bots use machine learning software and help eCommerce
businesses make real-time decisions on their stores. As helpful as these ‘good bots’ maybe,
bad bots programmed by hackers can be much worse. Hackers program these bots to
mimic real users and target eCommerce platforms to execute -
·
Credit
card fraud: Bots can be coded to keep repeating alterations of stolen
credit card numbers, test out multiple CVVs repeatedly and gain access to user
accounts. Then, they can acquire whatever they want from the unaware user’s
account.
·
Account Takeovers: After
stealing the login credentials of one eCommerce account, hackers can send bots
to different platforms and try the same username-password permutations until
they’re
successful. After taking over multiple accounts of the same user, they can
place fake orders, steal more information, and cause other types of havoc. By
the time users realize their accounts have been compromised, the bots would
have racked up plenty of orders. Either the vendors or the customer will have
to pay for the damages ensued.
·
Spybots: Spybots
are designed to monitor eCommerce platforms’ inner workings. Be it SEO strategies, inventory levels, or
pricing strategies – spambots collect vital details about eCommerce platforms.
Spybots can either be designed by competing for eCommerce platforms looking to gain
an unfair advantage in the market or by independent hackers who later sell this
information on the dark web.
How to Tackle These Security Threats?
Thankfully,
there are many things eCommerce businesses can do to reduce instances of such
fraudulent activities, the most important one is using the latest eCommerce
fraud prevention tools. These software tools help online vendors by –
·
Carrying out real-time risk
assessments on every transaction.
·
Reviewing risky or rejected
transactions to be better prepared for future attacks.
·
Reporting instances of
suspicious user activities.
·
Integrating with existing
enterprise software.
·
Securing customer data.
More importantly,
users of these online fraud-prevention tools can become members of a global
community against eCommerce fraud and share their experiences in safe spaces!