The year 2020 is gearing up to be a banner year for eCommerce fraudsters. As technology continues to both advance and evolve, fraudsters are coming up with more innovative ways to steal from honest merchants.
In the “eCommerce Fraud Trends 2020” report published by the Merchant Fraud Journal, they dive into some of the perpetrators’ latest schemes. Some of their newest tactics include synthetic identity fraud and SIM card swaps. Other modes of attack involve “wannabe hackers” going into the dark web to buy personal information, credit card numbers stolen via algorithms and then directly sold “anonymously” on the dark web.
If that is not threatening enough, among the more highly-skilled hackers, there is the threat of their going straight into a merchant’s bank account, using account takeover fraud or (ATO). Those most vulnerable include SMBs and “enterprise brands.”
Many companies are falling short in addressing these problems with eCommerce fraud head-on. They rely instead on ineffective tools provided by their email service provider or simply disregarding the problem altogether.
The Biggest Fraud Threats Facing Merchants
In order to protect yourself from these attacks, you need to be well-informed about what these threats look like. Here are a few of the biggest fraud threats facing merchants.
- Organized Fraud Attacks
Rapidly becoming more common, these organized crime rings involve sophisticated e-commerce criminals who can easily purchase hundreds, even thousands of credit card information on the dark web. They use this to steal on a large scale, while outwitting the standard fraud protection systems. The issue is that most merchants view fraud as a single event and not part of a larger pattern.
- Verification of Identity
Identity verification continues to be a thorn on the side for eCommerce merchants. The common solution is to require customers to set up intricate passwords which feature a complex combination of characters, upper and lower case letters, numbers and the like. The other go-to solution is the “multi factor authorization”. In theory, these processes should stave off fraudsters but it is certainly not without fault. Unfortunately, while the merchant is protecting the customer by enforcing these measures, it inevitably creates friction for the customer during the checkout process. Friction spells certain disaster for the business as customers are less likely to buy and the business loses revenue.
- Account Takeover Fraud (ATO)
Account takeover fraud happens when a fraudster uses some identifiable information about their victim. This could be a social security number or an email address in order to completely take over their account. This is not limited to savings and checking accounts. Brokerage, online shopping, and loyalty accounts can fall prey to these fraudsters. It is estimated that ATO has cost both merchants and customers $5.1 billion worldwide in 2018. This saw an increase of 120% from 2017.
Merchants Must Take Proactive Action
As eCommerce fraud continues to proliferate at such a rapid pace, merchants need to respond by taking a look at any gaps or weak links within their online platform. Doing nothing or the bare minimum could result in loss in both money and customers. Many fraud prevention solutions exist, it is just a matter of choosing what is best for your business.