If you own an e-commerce store, you understand how important it is to maintain your online store safe from fraud and scams. To secure your organization and consumers, vigilant digital security is more critical than ever. Attempts to make fraudulent transactions soared by 69 percent in 2021 alone in the post-COVID era.
Unfortunately, there is no one-size-fits-all strategy for protecting your company from these dangers. To protect themselves, small business owners must take a number of steps.
As a business owner, you have alternatives and actions to limit the risk of fraud and scam attacks on your company.
What Exactly Is an Online Scam?
Simply put, an online scam occurs when someone defrauds you or your organization on the internet. They are typically facilitated by cybercriminals and can range from credit card fraud to identity theft.
Scams on the internet have been around for a long time, but they have increased as a result of the surge in online sales caused by COVID-19, as many small businesses were driven to quickly construct an e-commerce gateway to their storefronts owing to constraints. The FBI went so far as to warn the general public about hackers and scammers at the onset of the pandemic.
Some scammers go so far as to use social engineering techniques. Scare tactics are used in these attacks to get users or workers to pass over secret and sensitive information.
What Is the Importance of Online Safety?
Business owners frequently store personal information on their computers, such as credit card information and passwords, which cybercriminals want.
Staying safe online will prevent your company from suffering major losses as a result of being compromised. Being scammed can result in more than just lost income or damaged goods; it can also result in a loss of critical brand equity with future clients.
The consequences of your company being cheated might be severe. As a result, you could have to cope with the following:
- The cost of any lost merchandise, handling, or shipment associated with any fraudulent orders.
- Chargeback penalties
- Reputational harm to your company
- The closure of your company’s bank account
The battle against fraud is difficult, but understanding the many varieties will help you identify where and when attacks may occur.
What Are the Different Types of Online Scams?
Here are some of the most popular frauds that currently target online businesses.
Phishing Scams
Every day, it seems like a new email fraud emerges. Phishing emails look to be sent by a legitimate sender, but they are designed to obtain sensitive information from the recipient. In Canada, for example, there are restrictions in place to safeguard against fraud and spam, such as the Canadian Anti-Spam Legislation.
You may have gotten an email or text message informing you that your company’s account has been compromised. By clicking on the link, you may expose yourself vulnerable to hackers who may target personal and commercial information. Before opening attachments or clicking on links, make sure you trust the sender.
Business owners should be aware that scammers are becoming more creative in their delivery by disguising themselves as real brands. By keeping your firewall and anti-virus software up to date, you can avoid getting phishing emails.
Fake Invoices
Scammers who send bogus emails including invoices in an attempt to collect cash from small business owners can also deceive them.
You may avoid potential losses by ensuring that your company has a well-defined invoicing process. If your firm receives an invoice, it will be able to trace it back to approved spending in your database.
CNP (Card-Not-Present) Fraud
This type of fraud occurs when a scammer uses a stolen credit card, a consumer’s identity, or banking card information.
A CNP often follows the procedure outlined below:
The scammer uses a stolen credit card to make an internet purchase.
The purchase is approved by the issuing bank, and the items are delivered to the scammer. The cardholder does not recognize the purchase and requests a chargeback from the credit card company.
In exchange, the store must reimburse the legitimate owner of a card and incur a loss. In the worst-case scenario, your store could be punished and blacklisted.
Advanced authorization tools, such as multi-step authorization or tokenization, can help your store protect itself from CNP fraud.
Friendly Fraud
Don’t be deceived by the name; this type of scam is far from nice. It occurs when a customer files a chargeback with their credit card company after having paid for and received their merchandise.
Sometimes it’s an honest mistake on the part of the client, such as when they don’t recognize the name of the store on their credit card statements. However, there are situations when friendly fraud is committed with malice. Some clients will go so far as to hire professional refunders who will denounce fraud and get their money back in exchange for a fee.
Friendly fraud is becoming more prevalent. Furthermore, if you do not keep precise records, you may be liable for any fees and penalties associated with chargebacks.
Friendly fraud is becoming more prevalent. Furthermore, if you do not keep precise records, you may be liable for any fees and penalties associated with chargebacks.
Scams involving government agencies
Cybercriminals are attempting to defraud businesses by posing as representatives from government agencies such as the IRS or the Social Security Administration. Scammers threaten victims with legal action and demand money up advance or payment in installments by phone or email.
Calling the government agency and inquiring about the offer or benefit is the easiest method to avoid being scammed in this way. Instead of using the contact information in the ad, go to the agency’s official website.
Account Takeover
This year, account takeover (ATO) fraud is on the rise. Scammers hack into vulnerable accounts for around 22% of adults in the United States. These cyber thieves exploit the stolen data to carry out illicit transactions, which can have a significant negative impact on your business.
As cyber fraudsters grow more inventive with their methods, we should expect ATO fraud cases to continue to rise in 2022. This form of fraud is now easier than ever before because of automated approaches such as scriptwriting.
You may safeguard your consumers from ATO fraud as a merchant by requiring two-step authorization or biometric passwords before they finish their transactions.
How Can I Spot Online Fraud?
Detecting suspected fraud can be a difficult task. Today’s merchants, on the other hand, have the opportunity to undertake their own digging and investigation to assist in spotting odd purchases and tracking down fraudulent behavior.
- Keep an eye out for any unexpected account activity. It’s crucial to keep an eye out for anything out of the ordinary. Take notice of items like several failed transactions, for example. This could be an indication that something is wrong and should be looked into further. Remember that if a fraudster is successful, they may try the same scam again, so blacklist their phone number, email address, IP address, and billing address.
- Examine the addresses. The most secure transactions are those in which the shipping, billing, and IP addresses are all within a few miles of one other. The greater the distance between the buyer and the seller, the more likely the transaction will be fraudulent. It could also be a hint of a hoax if the IP address is similarly hidden.
How Can I Defend My Company Against Fraud?
The last thing you want to do is fall victim to a scam. Here are a few pointers to help you avoid it:
- Employees should receive fraud and theft prevention training. Training personnel and encouraging them to bring forward anything out of the ordinary is a wonderful idea. To stay current on some of the most recent internet frauds, business owners can hold cybersecurity awareness courses.
- Passwords and sensitive information should not be sent by email. Make sure that no critical information or passwords are sent by email. This is due to the fact that emails are sent in plain text and hence are not encrypted. If a hacker gains access to your or any of your workers’ inboxes, vital information may be lost.
- Check invoices and payments for accuracy. There’s a risk you’re dealing with con artists. Before approving payments or invoices, double-check that they are who they say they are.
- Conduct regular security audits. This will enable you to discover any potential weak areas that could allow internet criminals to obtain your clients’ personal information or commit future fraud. You might conduct phishing tests or create a mirror of your site.
Stay Safe!
It might be difficult to keep your online store safe from fraud and other scams. The first step in keeping your online store secure is to be aware of its security. By remaining cautious, you can avoid becoming a victim of fraud or losing money due to chargebacks.
