How to Protect Your eCommerce Platform from Fraud
Whatever you do, wherever you go, there will always be someone who’ll want to take the best of you. That goes the same for your business.
As the time changes and technology evolve, businesses transfer to the internet–but so do fraudsters. You may find that with the rise of Artificial Intelligence (AI) you ought to be safer since now someone else who doesn’t have to sleep can look out after your eCommerce platform and prevent all frauds, but is that truly the case?
It just happened that fraudsters can use AI as well, so now there are synthetic identity frauds; 46% of companies already experienced it, and 88% fear it as a genuine threat.
What can you do to protect your eCommerce platform against such reckless frauds?
What is an eCommerce fraud?
Before going into battle, it would be wise to know your enemy. So let’s see what types of eCommerce frauds are the most common.
On the top of the list goes
- Payment fraud: This happens when someone, God forbid, steals your credit card information and now is buying stuff.
- Identity theft: A very close second place, and here fraudsters use stolen personal information to buy stuff or create fake accounts.
- Account takeover: Where hackers gain access to user accounts and make unauthorized transactions.
- Chargeback fraud: Where customers somehow get a refund while still keeping the product.
- Phishing: where through fake emails or websites fraudsters get the personal information of customers.
Being tricked doesn’t only hit on your pride. The impact on eCommerce can have significant consequences, like financial losses, damage your brand reputation, and erode customer trust.
Customers who fall victim to fraud on your platform may lose confidence in your ability to protect their data and may never come back. Or may even call you a fraudster.
What security measures can you take?
Now that you know your enemy and how they work, it would be safe to say that you can assess customer risk. There are different tools, softwares, and methods like SEON’s risk assessment techniques that can safeguard against illegal activities. What can these techniques and softwares do for your business?
Usually, and what’s most important, especially if you trade through different countries, you can use Anti Money Laundering (AML) assessment risk, so that yours and your customers’ finances stay safe.
You can secure your payment gateway, for example. Make sure that your payment gateway provider complies with the Payment Card Industry Data Security Standard (PCI DSS). This standard takes care of credit card information. You can add tokenization and encryption to protect payment data during transactions.
Multi-factor authentication is a new standard when it comes to protecting anything. It adds an extra layer of security by asking users to verify their identity more than once and through multiple means. That could be a password and a code sent to their mobile device. If you ever tried to log into a PayPal account, you know what it looks like.
Another warrior in your battle against frauds–implementing real-time transaction monitoring. This system can detect unusual patterns and flag suspicious activities. You can even use machine learning algorithms to analyze transaction data and identify potential fraud. The most interesting feature you can set up is to get alarms for strange behavior, like unusually large purchases or multiple transactions from the same IP address.
Verify customer identity
An eCommerce platform is your castle, and your customers are your friends. So you inform sentinels at the gate how they can recognize your friends and let them in to do their business.
You can do that by implementing verification processes to confirm the identity of new customers. These sentinels/services can cross-check customer information through various databases to make sure it’s legitimate. That way you can prevent fraudsters with fake accounts doing any harm.
Address Verification Service (AVS) compares the billing address given by the customer with the address on file with the credit card issuer. This sets legitimate cardholders from fraudsters. AVS can help reduce payment fraud by flagging transactions where the addresses don’t match.
Protect customer data
Once your friends are in the castle, you want to protect them and their data. You can do so by encrypting sensitive data, such as personal and payment information, so that unauthorized parties can’t access them. Make sure to use strong encryption standards to secure data both in transit and at rest.
Your eCommerce platform must also comply with data protection regulations. Usually those are General Data Protection Regulations (GDPR) and the California Consumer Privacy Act (CCPA).
These regulations mandate specific measures for protecting customer data and showcase the rights of consumers concerning their personal information. It’s more about how you can handle their data and how they can allow it, or not.
Educate customers and employees
Imagine saying you have an eCommerce platform secured against frauds, and your employees know nothing about it. They should be trained to recognize and respond accordingly to fraudulent activities. You can provide regular training on the latest fraud trends and best practices for preventing them.
Your employees should also know how to handle sensitive customer information and be vigilant in identifying potential threats. There’s no point in having a castle with strong walls and sentinels without giving them the sharpest weapon.
The next best step concerning education is informing your customers about the importance of online security and how they can protect themselves from fraud. Tell them what a phishing attempt looks like, how to create strong passwords, and how you take care of their accounts against suspicious activity.
Implement Fraud Prevention Tools
The battle won is the battle prevented. That’s why the best decision you can make is to invest in fraud prevention tools. You can use fraud detection software, machine learning, or AI.
Detection software has advanced algorithms to identify and prevent fraudulent activities. They can analyze transaction data, monitor user behavior, and flag suspicious activities in real-time.
As for machine learning and AI, they can enhance fraud detection by analyzing large datasets and finding patterns that may indicate fraud. AI-powered tools can adapt to new fraud tactics and every day improve their detection accuracy.
Handle Fraud Incidents
Accidents happen, right? No matter how strong a fort you created, something may happen to disrupt your plan. After all, it can happen to everybody. The smart move is to be prepared for every outcome, even if it means that your eCommerce platform will fall victim to fraudsters.
What you can do is to develop a comprehensive fraud response plan that outlines the steps to take in the case of fraud detection. This plan should include procedures for investigating incidents, communicating with affected customers, and dealing with any damage.
Now, how can you communicate with affected customers? Should you be ready for creaming, yelling, or calls to court? Not at all. The last thing you want to do is panic. Simply make sure that your communication is prompt and transparent. Tell them about the incident, include information about it, and let them know what kind of steps are taken to address the situation. You can also send some advice on how they can protect themselves. The key is in open communication.
Stay Informed About Fraud Trends
As usual, you can stay informed by following industry news and publications. You can subscribe to newsletters, attend conferences, even join forums.
To stay ahead of possible frauds, you can regularly review and update your security practices. Make periodic assessments of your fraud prevention measures and, if necessary, create some adjustments based on emerging trends and technologies. Such things are going to be more and more part of the future of e-commerce and will probably become vital if you’re looking to run an online shop securely.
Protecting Your eCommerce Platform
Can you truly protect your eCommerce platform from all the threats out there? Well, you can try. You can do your best and improve every day and still have a plan on how to handle the situation if it comes to worst. That’s normal. But that plan will be just a nice touch to your measures if you keep up with fraud trends, implement fraud prevention tools, and use any other imaginable security measure.
Still, don’t exaggerate to the point of obsession. In the sea of so many software, techniques, and tools it can be hard to choose what goes best with your eCommerce platform. For that reason, you can always ask professionals to help you. It’s your business, but you’re not alone in it.
