E-commerce has benefited small enterprises a great deal, but it has also come with the prevalence of online fraud. New merchants suffer the most at the hands of fraudsters because they often lack the resources to implement comprehensive fraud detection protocols. Consequently, the rewards of running an Internet-based business have been marred by the constant fear of fraudulent activity.
If you’re the owner of a new online enterprise, managing fraud should be among your topmost priorities. While you can never be 100 percent safe, a good strategy will keep your business from becoming an easy target for criminals.
E-commerce fraud today
Before outlining what to do to protect your online store from fraud, it’s perhaps helpful to understand the current tactics that criminals use. Stolen credit cards and identity theft, the two earliest forms of e-commerce fraud, are unsurprisingly the most common today. However, recent years have seen new methods, such as hacked customer information, automated bots, and social engineering take centre stage.
A fraudster’s primary goal is to make unauthorized purchases, which can then be converted into cash. To the merchant, this translates to costly chargebacks and retrievals, as criminals repeatedly file for money-back requests for money they didn’t spend. When left unmanaged, chargebacks can effectively drive a small online business to the ground.
The tools at your disposal
Most payment service providers offer useful solutions with their processing services, which you should configure before any trading can begin.
These tools include:
- Address Verification System (AVS)
This tool checks whether the billing address provided by the customer corresponds to the address at which the card is registered. A mismatch in AVS is a good indication that the “buyer” is in possession of a stolen card
- Card Verification Code (CVC)
A payment system with this tool will require a customer to key in the three/four-digit code on the back of a credit or debit card before authorizing a transaction.
- 3D Secure
3D Secure generates a secure session between a customer and the card issuing bank, where the cardholder is required to key in a password to verify that they’re the owner of the card.
Merchants employing 3D Secure protect themselves from chargebacks and disputed transactions by involving the credit card provider in the verification process. When fraud occurs, the card issuer takes full responsibility.
- Chargeback Alerts
Some payment processing companies go the extra mile to help you catch chargebacks before they happen. eMerchantBroker, for example, offers its clients access to an alert system that delivers chargeback notifications immediately a customer files them. You can, therefore, act fast to save your funds.
E-commerce fraud can be challenging to deal with, but you’re not entirely helpless. Reach out to your payment service provider and inquire about the security tools they offer.