It’s no secret that eCommerce fraud is a huge problem for retailers. It can be costly, time-consuming, and challenging to manage. As online retail sales are projected to grow by more than 20% in the next four years, it will be even more critical for businesses of all sizes to figure out how they will protect themselves from this issue.
In this blog post, we’ll introduce you to some methods that have been proven effective in combating fraud within your business without sacrificing customer experience or profitability.
What is eCommerce fraud?
eCommerce fraud can be defined as a transaction or series of transactions that result from dishonest or malicious intent. In general, these are the most common types:
- Fraudulent chargeback rules allow cardholders to dispute fraudulent charges and have them refunded by their bank—even if your business is still waiting to be paid. This is the single most significant expense that eCommerce merchants pay for fraud.
- Insurance claim abuse – Merchant insurance policies are costly, so it’s no surprise that some unscrupulous customers will file false claims to get a refund on items they never even purchased—or because of buyer remorse after buying something they did not want.
- Friendly fraud is when a customer pretends that an item was never received to get their money back, even though the purchase was legitimate and the transaction completed successfully.
Tips for managing eCommerce fraud
While there are several different methods for managing eCommerce fraud, the following are the most effective strategies.
Use a third-party payments provider: This can help your business take advantage of all of the features that larger companies benefit from when it comes to protecting yourself against fraudulent transactions and chargebacks. If you have a high sales volume, signing up with a third-party provider like Stripe or PayPal can also help you manage your eCommerce fraud.
Verify each transaction: Never automatically ship items without first verifying that the cardholder has authorized the purchase. Contacting them before processing their order is another effective strategy—and doing so may even boost future sales, as customers will feel more confident about their purchase.
Receive payment before shipping: This is one of the most effective ways to prevent eCommerce fraud. By ensuring that you receive your money first, there’s no risk of having to fight an insurance claim or deal with a chargeback later on down the line—which can be incredibly time-consuming.
Partner with an experienced, customer-focused company – According to the Federal Trade Commission (FTC) data, over half of all online shopping carts are abandoned. This means that customers may be dropping out for several reasons, which is why it’s so important to have excellent customer service and support when they do place an order.
Ensure you are only working with trustworthy carriers. A reliable shipping partner can help prevent chargebacks, as they will confirm whether or not the customer received their package before payment is refunded.
How to prevent eCommerce fraud
Finally, there are several steps you can take to help prevent fraudsters from targeting your business.
Build an excellent reputation: Customers may be hesitant to purchase something if they fear not receiving it or experience poor customer service if their order is delayed. Ensure that all of your policies and processes are clearly outlined on your site to avoid confusion.
Increase your security: Implementing additional layers of security, like two-factor authentication and strong passwords, will help keep cybercriminals at bay—especially if you are using an eCommerce platform that allows for seamless integration with third-party providers to protect against fraud like this merchant payments fraud prevention solution.
Besides passwords and two-factor authentication, SSL certificate is an essential security that adds value to the website. It secures the data between the server and browser. If you are an eCommerce owner, you can go with multi domain wildcard SSL like Sectigo or Comodo multi domain wildcard. All wildcard domains and their subdomains will be covered under this certificate.
Educate yourself on the latest trends in eCommerce fraud – The more you know about the latest schemes being used to defraud your business, the better equipped you will be at preventing them from succeeding.
Offer a strong guarantee and return policy – Customers who are confident that they can get their money back if something goes wrong tend to feel much safer making an online purchase—which is why it’s essential to provide a full refund if the customer does not receive their item, or is unsatisfied with it for any reason.
Why do you need an SSL certificate?
An SSL certificate is a way for your customers to confirm that they are actually on your business’s website and securely allows their browser to encrypt all information being sent between them and your servers. This means that when you collect sensitive data from buyers.
The importance of using a secure payment gateway
When you are processing transactions, it’s essential to use a secure payment gateway. This is an eCommerce tool that connects your website directly with one or more processors—and allows for the safe transmission of credit card data at checkout without ever exposing sensitive information to hackers. You can think of this as your site has its virtual bank account attached to it—one that is easy to set up and allows you to accept credit card payments securely.
If your business does not offer a payment gateway, it’s essential to select one from the get-go so that customers can safely pay for their orders. It would help if you also were sure to have an SSL certificate to use this feature and a secure checkout flow.
Protecting your business from eCommerce fraud is crucial for the success of your online store—and should be done as soon as possible to prevent potential damage or negative impacts on its growth. With these tips, you will ensure that all transactions are safe and secure without sacrificing customer satisfaction or convenience at any point.
Ecommerce fraud management may seem overwhelming at first glance—but by taking proactive steps that include implementing strategies for detecting fraudulent activity, verifying each transaction, and receiving payment before shipping your goods to the customer, you can ensure that your business is protected against eCommerce fraud.
As online retail sales are projected to grow by more than 20% in the next four years, it will be even more critical for businesses of all sizes to figure out how they are going to deal with potential threats to profitability and the customer experience—and take steps towards preventing eCommerce fraud.