How Does Fraud Occur?
Electronic fraud is an illegal activity carried out by a cybercriminal on a website, resulting in unauthorized or fraudulent transactions, stolen goods, and/or improper refund requests.
Although banks can identify and prevent some credit card fraud, some cases may still reach your online store, making it your responsibility to manage them.
If not detected in time, you may face chargebacks from the bank, a costly and inconvenient process that directly impacts your operation.
Although banks can identify and prevent some credit card fraud, some cases may still reach your online store, making it your responsibility to manage them.
If not detected in time, you may face chargebacks from the bank, a costly and inconvenient process that directly impacts your operation.
1. Classic fraud
This is the most common type of fraud. It occurs when a third party obtains credit card credentials on the dark web or through individuals who steal and sell confidential information.
These stolen data are usually used in online stores where the physical presence of the card is not required, making them more vulnerable.
These stolen data are usually used in online stores where the physical presence of the card is not required, making them more vulnerable.
2. Triangulation fraud
This is a more elaborate fraud that involves three parties: the scammer, a legitimate buyer, and an online store.
It generally follows this process:
The scammer offers an item at an attractive price.
A customer purchases the item and provides their personal information.
The scammer uses that information to purchase the same product from another store at a lower price and ships it to the customer.
The customer receives the product without knowing they paid more, while the scammer makes a profit.
It generally follows this process:
The scammer offers an item at an attractive price.
A customer purchases the item and provides their personal information.
The scammer uses that information to purchase the same product from another store at a lower price and ships it to the customer.
The customer receives the product without knowing they paid more, while the scammer makes a profit.
In this type of fraud, victims are usually unaware of what happened. Additionally, scammers may collect personal and financial data that could be reused in future fraud schemes.
3. Card testing fraud
The scammer identifies vulnerable websites to test the validity of credit cards and then use that information in other fraud activities.
For example, if a card is declined due to an incorrect expiration date, the scammer knows they only need to obtain that detail. To achieve this, they perform multiple transaction attempts in quick succession.
In these cases, the information used in the attempts is usually very similar, such as the same data or addresses.
For example, if a card is declined due to an incorrect expiration date, the scammer knows they only need to obtain that detail. To achieve this, they perform multiple transaction attempts in quick succession.
In these cases, the information used in the attempts is usually very similar, such as the same data or addresses.
4. Identity theft fraud
This occurs when scammers impersonate another person, obtain a credit card in their name, and make purchases.
This type of fraud has increased due to data breaches and is one of the most difficult to detect, as it is usually carried out by experienced individuals.
This type of fraud has increased due to data breaches and is one of the most difficult to detect, as it is usually carried out by experienced individuals.
5. Friendly fraud (chargeback fraud)
This occurs when a buyer makes a purchase and later requests a chargeback claiming that the card was stolen.
This claim usually happens after the product has already been delivered. It is common among consumers who understand the process, making it harder to detect, especially since banks tend to favor their customers.
This claim usually happens after the product has already been delivered. It is common among consumers who understand the process, making it harder to detect, especially since banks tend to favor their customers.
Pay special attention to transactions with high amounts or above your store’s average, as they are more prone to fraud and require additional validation processes.
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