Ecommerce has become an ingrained part of our lives, as most find it an effortless, convenient alternative to retail shopping, especially considering the times.
Unfortunately, as with most things, some bad actors always find ways to get in, mess with the system and conduct all manner of fraud. This not only damages the business or brand or affects the person, but in a sizable enough quantity, impact the ecommerce ecosystem as a whole.
Companies that put in place different fraud prevention programs have reduced their fraud attack response expenses by 42% according to Merchant Savvy. With that in view, here are 4 proven ways to mitigate ecommerce fraud:
Maintain PCI Standards
PCI or Payment Card Industry standards were introduced by the Security Standards Council. These standards were introduced by global standards in the payment processing industry like MasterCard and Visa to help protect consumer data from theft and fraud.
Because of its benefit to consumers and aid in preventing online mishaps, the PCI standards are strictly enforced for any online store or vendor.
According to the Nilson Report in 2019, losses due to fraud that happened because of payment card issuers globally reached $19.21 billion.
Luckily, most payment solution providers like PayPal have built their solutions while keeping PCI compliance in mind. A powerful payment gateway is a tool you must have for your ecommerce business as most of these solution providers will serve ecommerce stores with end-to-end solutions. Alternatively, they can also help with PCI compliance if they aren’t completely handling it on their own.
The detailed PCI standards can be verified from their official website.
Make CVV Mandatory
CVV stands for Card Verification Value. CVV is the three or four-digit code printed on the back of your credit card. It’s an effective way for consumers and merchants to protect themselves from fraud online.
According to Confirmit back in 2017, CVN (Card Verification Number) was one of the most widely adopted fraud prevention tools at around 88%.
One of the only ways that someone would have access to your CVV would be having your physical card. There is hardly any other way that someone could get your CVV from any other source.
This is guaranteed by PCI standards and rules which make sure that ecommerce sites don’t store card information. An ecommerce store cannot store a customer’s name, credit card number, or CVV.
By making CVV mandatory during the checkout process, ecommerce stores are effectively protecting their customers as well as themselves from any future chargebacks.
Block Suspicious IP Addresses
IP addresses can tell ecommerce stores a lot about the kind of traffic to their website. If you see a lot of IP addresses that are associated with spam, you can block access to these IP addresses.
According to Merchant Savvy, the riskiest billing IP location is China, while the riskiest shipping IP location is Venezuela.
If you think that you’re getting a lot of returns or chargebacks from a certain location or IP address, you should start investigating. Tools and websites like WhatIsMyIp will help you check for spam IP addresses. All you need to do is enter the suspected small and the tools will check the IP address against several blacklists.
Putting a blanket ban on IP addresses is not a smart thing to do. Your customers will be irritated and it will provide an overall poor on-site experience.
Use an Address Verification System
The Address Verification Service (AVS) is a tool that allows sellers to detect possible fraud or suspicious credit card transactions and prevent credit card fraud. AVS ensures and matches the billing address entered by the customer and the one aligned with the cardholder’s credit card account to make sure both of them are the same.
Address Verification System was a widely used fraud prevention tool at around 82% according to Confirmit in 2017.
Sellers receive AVS response codes during the authorization phase. Once the seller receives these response codes, they’re able to make better decisions about the transaction (approve it, make it an exception, or decline it).
When used effectively and in tandem with other fraud prevention tools, the Address Verification Service (AVS) can help to limit chargebacks and instances of fraud.
How Brands Are Dealing with Ecommerce Fraud
Because Amazon is the biggest name in ecommerce today, it’s no surprise it too has to work harder than ever to counter ecommerce fraud.
In 2020, Amazon started a new screening system where third-party sellers hop on a video call and have their identity and documents verified. This is just one of the many innovations that Amazon has introduced, like a machine learning system that vets sellers before they can go online or Project Zero that aims to combat fraud.
Shopify has put in place a fraud prevention system that utilizes machine learning algorithms to determine and alert the store owner if a transaction is suspected to be a fraud.
Preventing ecommerce fraud has become more important than ever before. With consumer behavior changing and an audience base more inclined to shop online, you need to provide a consistently seamless shopping experience.
Mitigating ecommerce fraud needs to be prioritized. Putting in a fraud prevention system is vital to protecting your customers. And creating secure and seamless experiences is key to sustaining ecommerce’s overall booming growth.
Wesley Cherisien is Chief Editor of wesleycherisien.com