How to combat e-commerce fraud
A report by the Centre for Economic and Business Research claims
that the cost to the UK economy by 2015 of e-commerce fraud is
expected to grow by £30 million as mobile phones and social
networking sites create new fraud opportunities. The impact of
e-commerce fraud on the UK economy is likely to rise by 18%, from
£165.2 million in 2011 to £195.3 million in 2015.
These are serious losses and emphasise the need for companies to
focus on this problem when doing business online.
Ten top tips to preventing e-commerce fraud:
1. Display fraud notices. By placing fraud
notices in both the content of your site and on order forms you can
deter most online scammers.
2. Analyse orders carefully. If an order seems
suspicious, check it out. Make sure customers have completely
filled out all information and that all of the information
3. Verify addresses where possible. Not always
possible, but if a large order seems to be going to a domestic
address or the company ordering has no checkable address - be
4. Get card CVC2 and CVV2 verification numbers and
expiration dates. On the back of MasterCard, most Visa and
Discover credit cards is a 3-digit security code located right
after the credit card number. American Express cards also have a
similar security code that is located on the front of the card
right above the cardholder's account number and is usually 4-digits
long. The majority of online payment processors support entering
security codes when processing credit card orders.
5. Be vigilant about orders that are from outside the UK
and EU. Since a large majority of fraud comes from Asia
and Africa, you need to be extra careful about accepting orders
that originate from there. It is harder to enforce your rights in
jurisdictions in these areas.
6. Be suspicious of orders that use a free email
address. Free email addresses are easy to get and require
little information. The majority of people committing fraud will
use them to hide their identity. Some of the most common free email
addresses are from yahoo and hotmail.
7. Check negative lists. You can use these
lists to check mailing address against a database of addresses
associated with past charge backs or fraudulent activity.
8. Use fraud prevention software. There are
software programs that traders can use to automatically check
orders to detect possible fraud. The free tools provided by Visa
and MasterCard that can help with fraud prevention.
9. Keep records of all interactions with
customers. Save all e-mails and voicemails. Also use
caller ID and try to have all calls with customers recorded. These
extra precautions will help keep you safe in a case where you might
need to fight fraud or charge backs.
10. Call and or e-mail the customer. Speaking
directly to the customer is the best way to clear up any
Fortunately most of these tips are simple common sense – it’s
always been unwise to trust a customer you have never dealt with
before and whose details are obscure. But online commerce is time
pressured and in difficult business times there is the natural the
temptation to cut corners. It’s a temptation you should resist.