How Fraud is Destroying the World of E-commerce
E-commerce fraud is a growing problem, with losses projected to exceed $48 billion by 2023. Common types of fraud include identity theft, chargeback fraud, phishing, credit card fraud, and friendly fraud. Merchants can suffer revenue loss, reputation damage, and operational disruption as a result.
E-commerce is one of the fastest-growing sectors in the world, with millions of transactions happening every day. But it also means it's a potentially big bullseye for the fraudsters who wish to make the best use of the weaknesses apparent in those platforms with the intention to steal money, data or goods from unsuspecting customers or businesses.
According to Juniper Research, online fraud losses are set to exceed $48 billion by 2023 from $22 billion in 2018.
E-commerce fraudulent activities may involve identity theft and account takeover, chargeback fraud, refund fraud, card-not-present fraud, friendly fraud and many more. Such types of frauds may pose serious threats to both the buyer and seller like monetary losses, destroying reputation, creating customer dissatisfaction, increment in operational costs, and legal problems.
Fortunately, there also are ways to fight against fraud in e-commerce and ways to protect your business and customers from such harmful activities. One of the ways is using a fraud prevention API like the Fraud Prevention API by Greip. This API is a powerful tool that can help you detect and prevent various types of fraud in your system.
How Fraud is Destroying the World of E-commerce
E-commerce is a blooming industrial unit that brings convenience, variety and affordability to consumers. But it comes with its dark side as well - the never-ending threat of fraud. Frauds continuously keep searching for new ways to con online shoppers and merchants alike, wiping out billions of dollars worth every year from the market.
Types of E-commerce Fraud
E-commerce fraud can take many forms, but some of the most common ones are:
- Identity theft: This is common where fraudsters use identities to purchase online or open accounts using stolen personal information like passwords, social security numbers, or even credit card numbers.
- Chargeback fraud: This is whereby customers challenge rightly done charges on their credit cards claiming that they did not receive the goods or services and that they were substandard and unauthorized. This therefore forces the merchant to refund the money hence making big losses.
- Phishing: This is whereby the fraudster will send fake emails or messages seeming to be of a look of genuine emails from reputable companies or organizations, seeking personal or financial information or directing them to malicious websites. Read more: The Power of Multi-Factor Authentication (MFA): Strengthening Security in the Digital Age
- Credit card fraud: This is when the usage of stolen credit cards or card information is used to transact fraudulently.
- Friendly fraud: Friendly fraud is when a legitimate customer makes the purchase and after the purchase has been fulfilled, issues a dispute with their payment provider claiming they didn't receive the product or service. Fraudsters exploit the chargeback process through false claims to obtain refunds or keep the merchandise without having to pay for it.
The Impact of E-commerce Fraud on Merchants
The Impact of E-commerce Fraud on Merchants E-commerce fraud can have serious consequences for merchants who sell goods or services online. Some of the impacts are:
- Revenue loss: Merchants may lose revenue due to chargebacks, refunds, fines, fees, or legal costs associated with fraud. They may also lose potential customers who are deterred by fraud risks or negative reviews.
- Reputation damage: Merchants may suffer from a loss of trust and credibility among their customers, partners, and suppliers. They may also face legal actions or regulatory sanctions for failing to prevent or mitigate fraud.
- Operational disruption: Merchants may have to spend more time and resources on fraud prevention, detection, and resolution. They may also have to deal with increased complexity and uncertainty in their business processes and systems.
Benefits of Using 3rd Party Services to Detect and Prevent fraud in E-commerce
By using a third-party service like Greip's Fraud Prevention API, you can enjoy many benefits for your e-commerce business, such as:
- Reduced fraud losses and chargebacks: Intercepting unauthorized transactions at the point of sale can help you to cut down on the associated costs and also potential disputes from customers or payment processors.
- Raise your customer trust and loyalty: With a safe and sleek shopping experience for the customers, you will surely win them over to come back for more.
- Increase operational efficiency and scalability: Automating and streamlining your fraud detection process will reduce manual work and human errors which will give the businesses a road to scalability while Greip is taking care of your financial security.
- Identity theft detection: It offers VPN/Proxy detection services that can help in identifying potential fraudulent activities.
- Dealing with stolen credit cards: Another crucial aspect is dealing with the usage of stolen credit cards. Greip.io also provides a BIN/IIN lookup service that can assist in identifying and preventing transactions made with stolen credit cards. These strategies not only help in maintaining the trust of your consumers but also ensure a secure and reliable business environment.
With potential disastrous effects on both buyers and sellers, fraud is a big threat to e-commerce and the world in general. However, armed of course with the right set of tools and knowledge, you can insulate yourself from these evil-minded human beings as you continue to enjoy the rare convenience that online commerce poses before you.
Fraud Prevention API by Greip will help you identify and prevent different types of E-commerce frauds right in your website or app – one of the greatest solutions online for E-commerce fraud prevention that you have to access. To learn more on how to use our APIs please visit our documentation page.
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