Back to Glossary

Fraud Risk Management

What Is Fraud Risk Management?

Fraud risk management in eCommerce entails employing methods and tools that detect risky or dubious transactions before they cause the business untenable losses. These tools and methods can also mitigate fraud cases in advance, even before they get on the store owner’s radar.

What Is eCommerce Fraud?

Also known as payment fraud, eCommerce fraud happens when a customer with bad intentions or driven by personal gains tries to deceive the eCommerce store when doing a transaction. Although fraud in eCommerce is prevalent with pseudo accounts, some fraudsters are bold enough to commit this heinous act behind their real accounts.

How Is eCommerce Fraud Detected?

eCommerce fraud management is critical if you’re going to realize profits and stay in business. Detecting fraud in your online store starts by screening all customers through the data you collect from them. With the user data at hand, you can flag suspicious customers before they log into your store or even access information that points to chargeback fraud risks.

Alternatively, you can use the data collected to create customer profiles. For instance, a customer’s email address can lead you to their social media profiles, where you can verify if the user really exists and is a real human. If not, you can block their profile from accessing your online store.

What Are The Effective Methods To Reduce The Risks In eCommerce Transactions?

The best eCommerce fraud solution is to prevent the risk’s prevalence before it actually happens. There are various ways of doing this, including:

  • Employee training and sensitization to ensure that they can implement policies and procedures;
  • Apply the Payment Card Industry’s Data Security Standard to shield your online store from data breaches;
  • Update shopping cart software to seal any loopholes that fraudsters might exploit;
  • Implement Address Verification, as well as Card Code Verification before processing payments;
  • Be vigilant enough to notice any suspicious user activity, such as a fake phone number.

What eCommerce Fraud Prevention Tools Should Merchants Deploy?

Businesses can leverage various online tools to prevent and mitigate eCommerce scams before they happen. That said, reliable eCommerce fraud prevention techniques include:

  • Implement Device Fingerprinting

This will help you flag suspicious users who recycle IP addresses and smartphone devices to target eCommerce stores with the intention of committing fraud.

Take advantage of a single data point to profile customers and flag fraudsters hiding behind pseudonyms and fake user profiles.

  • Social Media Lookup

You can do a reverse lookup of the user profile in question to determine whether they have valid social proof. Zero social media activity is a red flag.

RELATED TERMS

Frequently Asked Questions About Fraud Risk Management

What kinds of fraud target eCommerce?

Now that you understand what is fraud risk management, what are the kinds of frauds that target eCommerce retail stores? They include:

  • Payment fraud;
  • Triangulation fraud;
  • Clean fraud;
  • Friendly fraud;
  • Affiliation fraud.

What are the 3 most common types of online frauds?

Three prevalent online frauds include:

  • Phishing – a cybercrime performed via email, text message, or phone call by attackers who are posing themselves as a reputable person or institution;
  • Malware attacks – a cyberattack performed by malicious software as an unauthorized action on the victim’s software;
  • Hijacking – when an attacker takes control of someone’s computer system, network, or software programs.

What is triangulation fraud?

This type of fraud occurs when the bad guys use a fake storefront, disguising themselves as middlemen to receive orders and money from unsuspecting customers.

What are future trends for online frauds?

Prevalent eCommerce fraud trends include:

  • Authorized push payments;
  • New account scams;
  • Coronavirus cybercrime;
  • Account takeover scam.

You May Also Like

Why Is PIM Important?
7 min read
Product Information Management

7 Reasons PIM Software Is Needed For eCommerce In 2022

Read about the importance of PIM software for eCommerce businesses and for guaranteeing a smooth customer experience.

Read more
Back To School Sales Tips
9 min read
eCommerce Strategy

TOP 5 Back To School Sales Hacks To Increase Sales

Getting ready for the back to school sales can be difficult, but Gepard PIM's software can really take the stress out of routine work with product content.

Read more
What Are Some Product Fulfillment Hacks?
7 min read
eCommerce Strategy

7 Product Fulfillment Hacks That eCommerce Owners Should Apply In 2022

Explore the best product fulfillment tips for eCommerce store owners to meet customer expectations and grow your business.

Read more
Why Use Multiple Taxonomies?
9 min read
Product Information Management

Employ Multiple Product Taxonomies: The Key To eCommerce Success

Find out how employing multiple taxonomies can boost your team's productivity, help you stay ahead of the competition, and so much more.

Read more
eCommerce Video Marketing
7 min read
eCommerce Strategy

7 Best Examples Of eCommerce Product Video Marketing

Read about the importance and benefits of product video marketing for online sales, and learn the best practices from famous brands.

Read more
Dan Taylor SEO
5 min read
Expert Opinion

Expert Interview: Maximize The Value Of Your PIM Asset For eCommerce Website SEO

How to boost your eCommerce website SEO and enhance your sales and shopping experience with the help of PIM? Read on to find out.

Read more
Can Amazon Sell NFT?
11 min read
Insights / Trends

Amazon NFT: The Future Or Fiction?

Will NFTs change the conventional investment approaches? By discussing the Amazon NFT perspectives, the article explores how NFTs work and how to benefit from them.

Read more
How To Reduce Customer Churn?
7 min read
eCommerce Strategy

How To Reduce Customer Churn And Improve Customer Retention Rate

How do you prevent customer churn and retain more consumers? Learn more about the churn metric and ways of keeping more people in your client base.

Read more
eCommerce Strategies For Uncertainty Times
8 min read
eCommerce Strategy

The Best eCommerce Strategies In Times Of Uncertainty

Learn how your online company can survive in the precarious times of uncertainty by revamping its eCommerce strategies and leveraging specialized software.

Read more

Let’s Get In Touch

Need to contact us? Just use this form

Gepard Privacy Policy
Success