3 Type of Online Frauds Haunting E-commerce Industry in 2019

Posted by Ava Ruby on April 12th, 2019

E-commerce industry has expanded substantially over the past 5 years with sales surpassing billions of dollars mark and going into the trillions in a short span of time. Smartphone technology and app-based e-commerce business models have created a unified and systematic approach towards online shopping regardless of the targeted demographic or the products being sold on the e-commerce platform.

The success of E-commerce platforms is evident by the success of its market leaders with Amazon’s owner becoming the richest man on the planet because of the huge success of this e-commerce platform and Ali Baba is also a competitive giant in the same territory with e-commerce platforms being bought by the company left and right in different expanding markets as well. But despite having large coffers of revenues, e-commerce industry is still haunted by online scams and frauds just like all other businesses who have turned towards digital channels for higher revenues. 

Here are the 3 main frauds that are haunting the e-commerce industry in 2019 and that will be hard to counter in the absence of a professional and technologically sophisticated solution to counter scams and frauds.

Fake Addresses for Online Orders

It has been time and again quoted that scammers - and more importantly tricksters - have placed orders to the locations that either don’t exist or the addresses where there is no residential or commercial building present. “Grand Canyon” and “Mount Rushmore” are some of the examples that readily pop-up on top fake addresses that are listed by users for delivery of their placed orders. Online stores and e-commerce businesses offering cash on delivery are mostly haunted by such kinds of scams because the end-user is not required to share their financial details or have to pay for a fake order.

Although there are several identity verification solutions available that can perform address verification on behalf of e-commerce businesses. They require a person to show their authentic identity document in order to verify the address they have asked the ordered item to be delivered to.

Credit-not-present scams

Another common form of fraud that is haunting online e-commerce businesses is the non-availability of actual credit cards as most e-commerce platforms require their clients to only enter their credit card numbers. Scammers and fraudsters tend to exploit this ease-of-use feature introduced for authentic customers by entering stolen or fake credit card number to buy products from e-commerce websites. 

Frequent data breaches and other credit card scams are able to feed this card-not-present scam as all this financial data is readily available on the black markets operating on the dark web. Cashback requests and complaints about faulty transactions force the e-commerce industry to not only pay back the money to original card holders but it also makes it impossible to retrieve items from the scammers that have defrauded the e-commerce business with a fake or stolen credit card.

Account Takeover practices

Now this kind of identity fraud is becoming more and more famous among scammers and fraudsters and not only e-commerce industry but even the large banks are not able to find a suitable solution for this kind of online fraud. Account takeover means that e-commerce accounts held by authentic and original users are taken over by scammers and fraudsters and orders are placed using different shipping address but similar billing address. 

It takes quite some time before the authentic users can know the severity of the situation or before the e-commerce platform can know that the account of their user has been compromised by hackers.

Conclusion

E-commerce industry needs to take the responsibility to rid their operations from scammers and fraudsters but the users also have to make sure that they use their personal and financial information carefully on such platforms. More importantly, in order to avoid credit card scams and account takeover practices, this information must be kept secret and confidential. 

Going forward into 2019 and even beyond that e-commerce platforms need to produce result oriented strategies that help counter online scams, payment frauds and account takeover practices.