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eCommerce Fraud: Preparation and Prevention

Fraud is common in retail, regardless of the interface used, but when it comes to the world of e-commerce, there is a greater risk of fraud for three main reasons.

First, and most important, is the fact that you are not handling the payment method. Think about it – if you walked into a gas station with a piece of paper that had all of the right credit card information on it, they still wouldn’t accept that as payment. You would need the physical card in your hand to use it. It’s different in the e-commerce arena. There is no way to be 100% certain that you are dealing with a real person or if they are using real information.

Second, you are not in charge of your merchandise throughout the entire transaction. At the gas station, the cashier decides when it is ok for you to pump the gas, but when someone is shopping online, you ship the order out in good faith, trusting your preventative measures and hoping that you didn’t just ship it out at a loss to your business.

Lastly, there are several different types of fraud that can occur in an e-commerce marketplace. You have to watch out for counterfeit credit cards and gift cards, but also you have to make sure that you aren’t being taken advantage of by chargeback fraud. The internet is a vast space that allows criminals to take unprepared shop owners by surprise.

So how can you take the proper measures and secure your site to the best of your abilities? There are actually quite a few ways that are simple and effective when it comes to preventing e-commerce fraud and fraudulent activities. Make sure that you have a procedure that you follow every time you get an order and keep it consistent. You should be checking the shipping and billing addresses and security codes or CVV2 codes on all orders. If the shipping address and billing address are different, call the customer to verify the order. These are two steps that can go a long way in preventing fraud. You can also check the email that was given with the order to see if it is from a free email site. If an order is large compared to your average dollar sale, you should be calling or emailing that customer to verify the order and be sure it was correct.

In the end, it is better to have called and double checked an order than to be at a loss. No customer who has legitimately placed an order is going to be mad at you for calling. It shows that you are offering the best customer service possible, because your costs go up if you are constantly losing money to fraud.