Credit card fraud is a big problem for eCommerce stores. It’s one of the top reasons why some e-commerce businesses take losses and eventually get shut down. It’s true that online fraud is something to be expected. That’s why cybersecurity should never be taken lightly, especially for eCommerce stores where customers trust you with their personal information like name and contact details. Many people purchase from your store expecting the utmost safety because they are sharing such sensitive data as credit card or debit card numbers – so you cannot let them down!
In the last few years, e-commerce retailers have seen a huge surge in customers coming from all over the world. With such an increase of revenue and new customer base comes fraudsters looking to make their own dishonest earnings by taking advantage of others online. Juniper’s newest report found that this kind of criminal activity is going to cost these businesses $20 billion dollars in just 2021 alone! So it’s very important to take preventive measures.
To prevent credit card fraud on your eCommerce store, you need to understand the different types of fraud and common security threats.
What is Credit Card Fraud?
Credit card fraud is a deliberate attempt by someone other than the account holder to use the victim’s credit card information for fraudulent purchases. When computer hackers get access to any kind of credit or debit card, they can commit online credit card fraud by using it to purchase products or services online or even cancel an order after the payment has been made.
There are actually many ways that you can reduce fraud on your store. But first, you need to be able to detect credit card fraud before it happens. By being aware of the most common types of fraud and how to prevent them, you can make sure that your online business is protected from fraudulent transactions.
Let’s look at some of the common types of credit card fraud that can happen at your e-commerce store.
Types of Credit Card Frauds in Ecommerce
Card Not Present (CNP) fraud and identity theft are the most common types of credit card fraud. They involve purchases made using credit card details that is stolen or fabricated and then used in eCommerce transactions.
Card Not Present (CNP) Fraud
In a CNP transaction, the customer never has to hand over their physical credit card to you. Instead, a security breach can happen when you accept online payments from customers outside your store or via phone or mail orders. This could include the use of stolen credit card numbers along with billing information that was also stolen. Because this type of fraud involves payment transactions rather than actual possession of the cards themselves, it’s called “Card Not Present” or CNP fraud.
Identity Theft Fraud
The other type of fraud is identity theft, which occurs when scammers steal real information about an individual and use it to open a fraudulent account or obtain goods or services.
When you accept credit cards online, your business can be vulnerable to both types of fraud. Stolen credit card numbers and personal data are used for online purchases without the customer’s knowledge or permission. Since these purchases involve payment transactions that take place on your online store, you need to be able to protect yourself and your business. It would be best if you had a solution that can detect fraud before you lose any money on it.
How to Detect Ecommerce Fraud
Detecting eCommerce fraud is not easy. It’s a complicated process that involves assessing the risks involved in transactions. There are many things store owners can do to reduce the chances of getting scammed, but it always helps to be aware of what you’re up against.
An eCommerce store owner can detect Ecommerce fraud by making use of some of the following security techniques:
- Look for IP addresses that show up more than once. This is a sign that someone is using a proxy server to make the same purchase repeatedly.
- Check for invalid shipping addresses or phone numbers. If they match, it could mean a customer has stolen someone’s identity or address to get credit cards sent to them in the mail.
- Monitor your order rates on different days and times of day to see any patterns that you can identify.
- Check for unusual customers who have made many purchases over the last few days. They may be reselling items on eBay or taking advantage of a low pricing offer.
- Get to know your customers and the purchases they make. If you notice someone making several different purchases but doesn’t look like their usual self, then it could mean an automated program has hacked your store.
- Watch for high dollar orders that are being made on new accounts. It is common for scammers to target eCommerce stores with a fake login page or pop-up box in order to steal credit card details from shoppers.
One of the best things you can do is prevent credit card fraud on your eCommerce store. Always look out for suspicious transactions. You should assume that there will be some CNP or identity theft fraud in the future. Avoiding credit card fraud on your e-commerce store requires a proper fraud reduction and prevention strategy. This is why you should strive to make your website as secure as possible, right from the start.
Credit Card Fraud Prevention Methods For Your Ecommerce Store
There are many ways you can prevent credit card fraud on your ecommerce store by implementing some simple techniques that will protect both you and your customers. Lets check out some fraud prevention methods below,
1) Use SSL Encryption – Make sure that your website is secured with SSL encryption before a customer enters his or her payment details on it. You can use TLS/SSL certificate issued by your domain provider or an external vendor like GoDaddy.
2) Don’t Keep Credit Card Information After Authorization – If you’re using a shopping cart service or third party payment gateway provider, make sure that it doesn’t keep a copy of customer credit card information in its database.
3) Use AVS & CVV2 – Merchants use the Address Verification System (AVS) to verify billing and shipping addresses provided by their customers. Make sure you’re using it on your eCommerce store before processing an order. To be on the safe side, you can ask for a customer’s ZIP code as well.
With the Card Verification Value-2 (CVV2), also known as CVC, you can verify that an individual has physical possession of the card being used for purchase online or at a retail outlet.
4) Refuse Express Checkout – If you accept online credit card payments, refuse to process express checkout orders because they’re more vulnerable to fraud. Although the level of security is higher with this payment option, it’s still possible for criminals to use stolen cards and fake identities while placing an order.
5) Do Not Accept Orders From Foreign Countries – This might vary depending on your business but try to avoid accepting online credit card transactions from international customers.
6) Use IP Verification – It helps if you’re running an eCommerce store that attracts many legitimate customers. To help weed out potential fraudulent orders that are coming through from abroad, verify the IP addresses of customers using your website. Keep in mind that some legitimate customers may have to use proxy servers for accessing your website if they’re located in a foreign country, so you may have to allow access from certain IP addresses only.
7) Use Discretion on Refunds – According to the Payment Card Industry Data Security Standard (PCI DSS), merchants are required to refund any amount of credit card transaction that has been made within 60 days prior to cancellation request by their customers. Bear in mind that some fraudulent transactions can take place within this period as criminals will often buy products online with stolen cards or fake identities, and then claim refunds afterward.
8) Enable Strict SSL Mode – Ensure that your eCommerce store uses “Strict SSL mode” when accepting orders online. In this case, SSL certificate validation is mandatory before a customer is granted access to the checkout page.
9) Use Fraud Prevention Services – Apart from using SSL encryption and AVS / CVV2 verification, there are other fraud prevention services that you can utilize in your eCommerce stores such as address verification, card verification codes (CVCs), billing zip code validation, post-transaction authorization, and dynamic IP address detection.
10) Do Not Store Credit Card Information – Never store a customer’s credit card info on your website after an order has been placed. This method is secure and convenient for customers because they don’t have to remember their payment details every time they place an order.
11) Use a Secure Shopping Cart – Make sure you’re using a shopping cart service or payment gateway provider that is PCI compliant, as it will ensure the highest level of security for any transaction taking place on your eCommerce store. At Finical, we make sure your online business runs smoothly and securely with our integrated online payment solutions that make your online checkout fast, secure, and seamless.
Our payment gateways are PCI compliant that allows e-commerce stores to accept all major credit, debit cards and protect against fraud while offering the best rates and lowest fees in the country.
12) Never Use Default Settings – To prevent any security breach on your eCommerce store, make sure you’re changing all the default settings of your shopping cart, payment gateway service provider, and hosting service. Using default settings becomes an open ground for security threats like cross-site scripting and SQL injection attacks.
13) Apply Security Patches Immediately – Once there’s an update available for your website, don’t procrastinate in applying it because this can potentially leave security loopholes vulnerable to hackers.
14) Avoid Using Shortcuts – If you have your eCommerce website, you may have heard of the saying “a stitch in time saves nine”, which is very true when it comes to security. You should avoid using the same login credentials for multiple accounts, including email accounts and social media logins, as these are vulnerable to hackers.
15) Protect Your Store with a Firewall – I know some people might find this annoying because firewalls could potentially block legitimate orders coming from overseas customers, but what can we do? The best thing to do is to manually check each transaction before approving it so that only valid ones will go through.
16) Track Credit Card Fraud Vulnerabilities – Once your eCommerce store has been set up, never ignore any vulnerabilities or loopholes that have the potential to leave your customers’ personal or financial information vulnerable.
17) Do Not Overlook Security Training – It’s not enough to employ a security team because they need proper training before allowing them to do their job well. This is also relevant for you as an eCommerce store owner, so make sure you go through regular cybersecurity training courses and always keep up with new threats that could affect your website in case of a data breach.
18) Keep All Software Updated on Your Website Hosts – When using shared hosting accounts, this responsibility may fall upon your web developers who will be more than happy to assist with updating all the software.
19) Use Unique Usernames & Passwords – Never use the same username or password for your eCommerce store as you do for your social media and email account. If hackers can get hold of your username and password, they can compromise every single service linked to it.
20) Be Aware of the Limitations – PCI DSS is not an end-to-end solution that will automatically protect your customers against credit card fraud. The truth is that it only covers the technical aspects of protecting sensitive information. This is why you should also take measures to protect your customers’ personal details from being exposed, such as registering your website with the Safe Harbor program and/or shopping cart hosting providers where possible.
It’s important to keep your eCommerce store secure at all times. Our team is always happy to brainstorm with our clients and offer suggestions based on their unique needs! The above list of 20 security tips for online stores should help you get started on the right foot, but don’t hesitate to reach out if you have any questions or concerns about implementing these principles in your own business.
Contact us today to learn more about our online payment processing solutions and payment gateways that are highly secure and can prevent your e-commerce store from all kinds of credit card fraud.
