The Covid-19 pandemic led to the proliferation of online and digital businesses, paving the way for a more active internet. While it resulted in the growth of online companies, there were some downsides.
As many customers preferred using credit cards online, the role of fraudsters in online payments has become rampant. A Research paper from Statista indicates that e-commerce online payments fraud globally stood at 41 billion USD in 2022 and is expected to reach 48 billion USD by 2023.
Read on to delve into how fraudsters trick customers, steal data online and how this impacts businesses, fraud prevention, and more.
What are the tactics used by fraudsters online?
The ultimate objective of fraudsters is to acquire personal information and create fake accounts. The surge in cyberattacks has resulted in an increased prevalence of identity theft. Cybercriminals and Fraudsters use various tactics like – phishing, social engineering, hacking, and card skimming:
Phishing
Phishing is what happens when a fraudster pretends to be a company and sends emails or texts to trick a customer into providing their account details.
Social Engineering
Another form of fraud is Social Engineering, wherein scammers trick users into giving them their details over the phone or in person.
Card Skimming
Card Skimming occurs when a device is illegally installed on an ATM or POS terminal and copies the credit card data or cardholders’ PINs.
Hackers
Hackers steal personal and account information from unsecured websites or through software vulnerabilities then sell that information on the dark web. Fraudsters buy stolen credit card information, login details for online accounts like Netflix, and government issued IDs. This information allows fraudsters to easily hijack accounts or create new fake accounts.
How to tackle fake accounts issues and ensure fraud prevention?
Technology advances have opened the door to more effective fraud prevention. Some of these include:
Use of Machine Learning
Machine learning uses data collected from payments and analyzes the patterns to draw meaningful outcomes. It interprets huge volumes of data gathered from online payments and associated fraudulent behaviors to arrive at actionable insights. These interpretations are conducted by a team of fraud analysts who study various aspects and find ways to help prevent fraud.
Address Verification and Card Verification Value (CVV) Check
An effective way to prevent fake accounts and fraud is by making customers enter their CVV and Address. Many stolen credit cards don’t have complete addresses or CVV codes. If a fraudster tries to setup an account with these checks in place the fraud is generally prevented.
Adopt Two-Factor Authentication
Another highly foolproof way to protect your business from stolen credit card details is to enable a two-factor authentication. Two-factor authentication allows the customer to enter a code sent to their mobile phone to verify their identify in addition to their password.
Clear Policies and Procedures
It makes sense to have clear guidelines and policies on customer chargebacks documented on your website to safeguard your business against chargeback fraud. Ensure you specify the rules for refunds, customer disputes or disagreements, etc. If you find customers with dishonest intentions trying to extract chargeback amounts, you can block them in the future.
Software Solution
FraudLabs Pro, incorporates specialized techniques into our fake account detection and fraud prevention program.
We follow various strategies to minimize losses and chargeback fraud, such as:
Exhaustive Fraud Validation: Our fraud prevention and validation strategy focuses on all the data points, including IP geolocation, billing and shipping address, credit cards, blocklisted data, etc., making fraud detection easier and more effective.
Customizing Fraud Detection: We offer the option to create your custom rules that detect frauds and can be modified to suit your requirements as your business grows.
Collaborative Network: We have an extensive network of global merchants who keep updating any instances of fraud or the patterns identified. This lets other businesses stay alert and tap their potential to prevent such attacks.
Wrapping Up
Fake accounts are becoming rampant worldwide. With the rise in cyberattacks, the need for fraud prevention is imperative. While there are numerous kinds of fraud online, the most detrimental to businesses is chargeback fraud. FraudLabs Pro focuses on designing solutions to combat chargeback fraud while minimizing losses. Feel free to reach us here for any queries or assistance.
