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.
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’ may be, 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 – spybots collect vital details about eCommerce platforms. Spybots can either be designed by competing 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!