How fraud is carried out

E-Fraud is an activity that is illegally conducted by a cybercriminal on a website and results in unauthorized or fraudulent transactions, stolen merchandise and/or improper refund requests.

Although banks identify and prevent some credit card fraud, it is possible that some of it may find its way into your online store, and it is your responsibility to deal with it. If you don't avoid them, you will be facing chargebacks from the bank. And receiving a chargeback is an annoying and costly process that you don't want to deal with.

Here are the most common types of fraud that you should watch out for to prevent attacks on your online store:

1. Classic fraud

This is the most common type of fraud, where a third party buys credit card credentials on the dark web or from unscrupulous agents engaged in the theft and sale of confidential information. Such stolen data is usually processed in online stores, since the physical presence of the card is not required, making them more vulnerable.

2. Triangulation fraud

This more elaborate type of fraud involves three parties: the fraudster, a legitimate buyer and an online store. They usually follow these steps:

1. The fraudster offers an item at an eye-catching price.
2. A customer, buys the item, giving the scammer all his personal data.
3. The scammer takes the customer's data and buys that same item for them on a different site for a lower value and has the item shipped to the customer.
4. The customer receives the item they purchased, not realizing they have overpaid. The fraudster keeps the markup profit.

In this type of scam, victims usually do not realize that they have been scammed in any way. In addition to this, scammers may even collect long lists of account data and credit card numbers. This means that the victim of a triangulation scam could have their data used again in an unrelated scam until months or years later.

3. Card testing fraud

The fraudster locates vulnerable websites to test the validity of a credit card number in order to use that same information on another website to commit fraud.

A clear example is when a card is declined for having the wrong expiration date, so the fraudster will know that all they have to look for is the expiration date. They will try to get this information by making several transaction attempts in quick succession. The information on the orders will usually be identical, either all the data or a set of data, such as the shipping address.

4. Identity theft fraud

In this case, fraudsters assume the identity of another person, take out a credit card in that name and go on a shopping spree. This type of fraud has increased considerably due to the number of information leaks. It is also the most difficult to identify because the fraudsters who do it are usually professionals.

5. Friendly fraud, also called chargeback fraud

An online shopper makes a purchase and then files a chargeback claiming the card was stolen. The chargeback is usually filed after the goods have already been delivered. This type of fraud is usually done by consumers who know very well what they are doing and is often difficult to detect because banks tend to favor their customers when it comes to chargebacks.

It is common in transactions for large amounts. You may feel excited that your store has a big sale, but it is in transactions above the average store sale amount that you should pay more attention and apply validation processes.