6 Types of E-commerce Scams You Should Know

6 Types of E-commerce Scams You Should Know
Updated:27 Jul, 2022

E-commerce is the leading source of revenue for many businesses. Do you know that the e-commerce business model is expected to generate 5.42 trillion USD sales per year by the end of 2022? But unfortunately, the increasing popularity of shopping online is not left behind by scams or online frauds.

Hence, before becoming an avid e-commerce user, knowing all about the possible types of e-commerce scams is essential. With global internet connectivity leading the winds of business change, below are the six different types of e-commerce scams that can land you in trouble.

6 Types of E-Commerce Scams:

Are you planning to make your debut in e-commerce? Have a quick look at the six different types of e-commerce scams to stay protected from the notorious transactions:

1. Affiliate Fraud

It involves illegal activities that are supposed to generate affiliate commissions. In these frauds, the hackers defraud the online merchant using fake activities to generate commissions or increase commission amounts. One of the common affiliate frauds is “typosquatting.” 

Tips To Avoid: It is recommended to carefully screen and ensure communication with affiliate marketers. The close monitoring of data analysis and website traffic further helps block suspicious IP addresses. Further, businesses can go for using affiliate fraud detection systems.

2. Refund Frauds

It includes refunding the goods that were ineligible for the refund under the general policy. It is done in lieu of money or other goods. The goods returning can be simulated in the original packaging or can be illegally bought. 

Tips To Avoid: It is recommended to go for the ID and contact information while accepting returns. Further, all-cash refunds should be eliminated, and if needed businesses must revise their return policies. Businesses can offer store credit or gift receipts in the place of refund frauds.

3. Clean Frauds

It involves little changes by the cybercriminals to check its validity for large transactions or the last step of credit card fraud. These are used by the hackers having access to the stolen credit cards and cardholder’s information. This fraud seems to be legitimate as the credit card owner is unaware of the whole process but it happens from a legitimate card only.

Tips To Avoid: It is crucial to protect your credit cards. Any cases of theft or stolen credit cards should be immediately reported to the concerned authority for preventing any further transactions. It is also important to safeguard the credit card holder’s information to prevent clean frauds.

4. Interception Frauds

The fraudster intercepts any data passing through two entities. It can be of different types targeting the means of communication like emails, website interfaces, app interfaces, etc. It may include intercepting important emails, posing as a login page, planting malware on different websites, modifying orders to have access, etc. All these different interception frauds are widely observed in e-commerce.

Tips To Avoid: Data encryption is the best way to avoid interception fraud. Enabling the HTTPS on all websites and applications, using a third-party service provider for invoicing, etc., can work in this direction. Further, employees can be redirected to change passwords regularly and scan the corporate devices for possible malware, etc.

5. Triangulation Fraud

It occurs when any customer makes a legitimate purchase on the third-party marketplace from a fraudster that, in turn, orders from original retailers using the stolen credit cards. Hence, it involves three different parties: the merchant, the customer, and the fraudster.

Tips To Avoid: Any suspicious activity on e-commerce can hint at triangulation fraud that requires highly advanced systems for quick monitoring. Hence, for any e-commerce business, it is crucial to track the increasing payments and user behavior. It can significantly help to reduce chargebacks and the number of transactions.

6. Identity Theft

The customer's details, financial details, etc., are stolen in the identity thefts. It results in loss of revenue, time wastage, and compromised trust for customers and merchants. It is one of the widely observed e-commerce scams that cause various issues. Identity thefts cause the loss of multi-dimensional information to hackers.

Tips To Avoid: Identity theft prevention is an integral part of the operations that starts with customer data protection, site-wide encryption, strong security measures, etc. The multiple verification methods include browser fingerprinting to detect repeat and occasional users. Last but not least is to restrict employees' access to critical systems.

Wrapping Up:

Do you know that global e-commerce losses to online payment frauds have amounted to 20 billion USD in 2021? With the growing craze of e-commerce battling the growing scams, it is essential to stay vigilant at all times. The quick list of the top six scams helps handle such situations critically.

To optimize the benefits of e-commerce, it is essential to know about chargeback frauds, account takeover frauds, identity thefts, interception frauds, triangulation frauds, card testing frauds, etc. A little extra care and awareness can protect you from falling prey to these e-commerce frauds.


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