Common types of fraud attacks targeting the ecommerce sector include:
Fraudsters may use stolen credit cards to make purchases and then later file chargebacks, leaving the merchant to face both the loss of goods and chargeback fees.
Consumers may abuse refund policies by repeatedly purchasing products, using them temporarily and then returning them to receive full refunds or may seek refunds without returning the related merchandise. This latter practice has become so popular that organized frauds groups offer refund-as-a-service, promising to secure a refund from a merchant on a consumer's behalf in exchange for a fee. Consumers that participate risk exposing payment and identity information for subsequent abuse elsewhere. In turn, this practice can impact a merchant’s profitability.
Promotion and Loyalty Fraud
Fraudsters have gained the ability to utilize stolen promotion/loyalty identities to acquire free products. This results in increased financial exposure to the merchant.
Fraudsters can exploit passwords and login credentials that are reused across multiple platforms to gain unauthorized access to consumers’ accounts. This puts both merchants and consumers at risk.
Consumers falsely claiming unauthorized transactions or filing chargebacks instead of resolving disputes directly with the merchant can lead to loss of revenue and increased chargeback fees. Merchants often struggle to differentiate between genuine cases and fraudulent chargebacks.
High value brand items like jewelry, clothing, video gaming consoles or luxury accessories are being maliciously acquired and shipped to locations inconsistent with prior purchase patterns and behaviors.
Automated bot attacks set up by fraudsters can disrupt an ecommerce site, steal data, make fraudulent purchases or perform other malicious actions. This type of attack is one of the most significant challenges for the ecommerce sector as it targets not just the conventional consumer touchpoints of new account creation and logins but also change of details events, which had the highest growth in bot attacks at 441% globally YOY in 2022 vs. 2021, according to data from the LexisNexis® Risk Solutions Cybercrime Report 2022
Card Not Present (CNP) Fraud
Fraudsters attempt to verify stolen or cloned card details by making small transactions or “card testing” before initiating larger fraudulent purchases. This poses a challenge for merchants as they must identify and prevent such fraudulent activities.
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