eCommerce enterprises are always looking to provide an accessible, digital-first experience for their customers. As such, these platforms have exploded in popularity in recent years. A growing population of customers now come equipped with digital shopping apps to make online purchases on a variety of devices. Legitimate customers aren’t the only group taking notice, however. Cybercriminals and other bad actors are looking to cash in on the popularity of ecommerce and online merchants, giving rise to ecommerce fraud.
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Protecting Shopper Trust – The Role of Early Fraud Detection in eCommerce Account Security
What is eCommerce fraud?
eCommerce fraud is any malicious activity that can occur on ecommerce platforms. As cybercriminals are always looking to make a profit with their attacks, they are always on the hunt for vulnerabilities on ecommerce platforms. eCommerce fraud can include some of the following:
- fraudulent transactions with stolen credit cards
- account takeover (ATO) attacks
- return and refund fraud
- money laundering
eCommerce fraud can result in significant financial losses and damaged reputations for impacted enterprises. Making matters more difficult is that ecommerce enterprises can sometimes be stuck between a rock and a hard place when it comes to stopping ecommerce fraud. Emplacing security that is too stringent might make it difficult for consumers to make their purchases. Security that is too light will open them up to attacks. Something has to give.
Types of eCommerce Fraud
In order to best mitigate the fraudulent activity that they face, and protect customer data, ecommerce enterprises need to understand the multitude of techniques and tactics of cybercriminals. Here are some common fraud types facing ecommerce enterprises.
One common type of ecommerce fraud is identity theft, where cybercriminals and fraudsters use stolen personal information to make unauthorized transactions or open new accounts. This type of fraud can occur without the physical credit or payment card.
Credit card and online payment fraud
Credit card fraud occurs when a cybercriminal uses a stolen credit card number and uses it to make fraudulent orders. As data breaches continue to mount, credit card information can sometimes even be purchased online by cybercriminals, making it easily available. The stolen credit card information can be used to make purchases on an ecommerce platform, or the criminal can sell the information on the black market.
Phishing involves scammers tricking customers into revealing personal information through fake emails or websites that mirror ecommerce platforms or messages. This can lead to account takeover, where fraudsters manipulate customer accounts to make unauthorized purchases.
Denial of inventory
Denial of inventory occurs when cybercriminals use automated bots that add items to shopping carts at online stores that never go to checkout. This prevents customers from making legitimate purchases and can sometimes be used by cybercriminals to disrupt a competitor.
Card Not Present Fraud
Card-not-present fraud occurs when a criminal uses stolen credit card information to make an online purchase. These fraudulent transactions are particularly susceptible to payments fraud, where bad actors use stolen cards to purchase goods without the legitimate cardholder's knowledge.
Account takeovers (ATOs) and credential stuffing
Much like credit card information, login credentials like usernames, passwords, email addresses, and even a user's billing address can be found on the dark web. These credentials enable credential stuffing and account takeovers. Account takeover (ATO) fraud involves fraudsters accessing online accounts, typically via phishing emails, impersonating customer support representatives, or exploiting weak passwords.
Once they gain access, attackers can use stored payment cards to make unauthorized purchases. ATO fraud not only results in monetary loss but also damages trust in good customers and harms brand reputation. Credential stuffing, on the other hand, involves using stolen login credentials to gain unauthorized access to user accounts and is often done at scale using automated bots.
How bots enable ecommerce fraud
Cybercriminals have been increasingly enabled by the use of automated bots and botnets. Bots allow cybercriminals to automate much of their processes, or can be the tool that lets cybercriminals launch attacks at scale. For instance, a botnet can be used as part of a credential stuffing attack by using different combinations of login credentials to gain illegal access to an account.
Bots can also be used to send phishing or spam messages that trick people into providing their credentials or personal data. For ecommerce sites worried about their reputation, bots can impact that as well by making negative reviews or comments on social media.
Also enabling cybercriminals is the growing Cybercrime-as-a-Service (CaaS) industry in which would-be bad actors can purchase bots or other “solutions” to help them to conduct their attacks. This places sophisticated tools in the hands of low-skilled cybercriminals and increases the amount of capable attackers security teams need to worry about.
Best practices to prevent eCommerce fraud
Fraud detection software that can help to detect suspicious transactions and flag them for further review. Additionally, ecommerce sites should ensure that they are using a secure payment gateway to process credit card payments. It is also important to educate customers on the importance of strong passwords, backed by two-factor authentication.
To combat the rising issue of bots and online fraud, ecommerce fraud protection platforms should use pattern recognition, machine learning, and other analytical approaches to detect and prevent fraudulent transactions, inflated clicks, and false impressions. Bot detection systems can also be used to differentiate between human and bot traffic, using triggers like CAPTCHA at the login or account creation flows to prevent payment fraud and account takeovers from occurring.
Arkose Labs secures eCommerce platforms
The Arkose Labs’ Platform classifies traffic based on the underlying intent of users and deploys appropriate countermeasures to remediate attacks in real time. Arkose Labs goes beyond stopping fraud attempts and attacks to deliver a long-term solution that deters fraudsters while enhancing the good user experience for legitimate consumers.
In-depth protection with Arkose Labs enables online retailers to take a zero-tolerance approach to fraud and abuse on their websites and apps, while enhancing user experience and customer loyalty.
Suspicious traffic is targeted with tailored Arkose MatchKey challenges that puts the right amount of pressure on fraudsters’ ROI without blocking the good user experience. Designed to deter large-scale attacks at the gateways of fraud, Arkose Labs enables retailers to eliminate fraud from their ecosystem early, reduce stress on the payment flow, and increase trust from users.
Arkose Labs is so effective that they even offer a financial guarantee with its $1 million Credential Stuffing Warranty.
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