Top 5 Fraud Prevention Strategies For Online Merchants

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Lock and credit card on the computer

With the advent of more modern technologies nowadays, many consumers shift to online platforms to perform some transactions, including purchasing goods from e-commerce merchants. Unfortunately, this is one reason why online merchants are continuously facing e-commerce fraud, which is a costly problem. 

Primarily, an e-commerce fraud occurs when a fraudster performs a criminally deceptive act during an online transaction with the objective of seeking benefits from the merchants while adversely affecting their business. Hence, with a variety of e-commerce fraud schemes that online merchants like you should be aware of, it’s important to mount effective defenses to protect your business from becoming a victim. 

To avoid being a victim of e-commerce fraud, below are the top five fraud strategies to consider from the get-go: 

Invest In Fraud Prevention Tools

In today’s modern world, protecting your e-commerce business doesn’t have to be a very challenging undertaking. Thanks to a variety of anti-fraud tools, you can prevent fraudsters from damaging your business’ financial health and reputation through risk scoring, machine learning, and other ways to stop fraud. Since virtual fraudsters are also updated with the latest innovations, this allows them to find new opportunities of attack in your business’ defences. 

Because of this, it can be a good idea to invest in some fraud prevention tools to ensure your e-commerce store is protected against fraudsters. These tools can include: 

  • Rudimentary tools: These tools are usually incorporated into e-commerce platforms and virtual shopping carts. They’re used to determine fraudulent acts through email address validation, IP geolocation, and the conduct of device fingerprinting. 
  • Top-level tools: These tools perform more than one function in preventing fraudsters from victimizing your e-commerce business. They can help detect several fraud threats that the traditional or rudimentary tools may miss. 

An example of a top-level eCommerce fraud prevention tool is the Device Intelligence software coming from a reputable provider of anti-fraud solutions. It uses mobile applications and browsers to analyze devices and other identities that transact across digital channels to identify and mitigate risks of fraud. 

Perform Security Audits Regularly

Another fraud prevention strategy to keep in mind as an online merchant is to conduct regular security audits. These security procedures are intended to detect flaws and other problems in your security protocols before fraudsters will do. You can do this by checking the following: 

  • Whether your shopping cart software and plug-ins are up-to-date;
  • Whether your SSL (secure sockets layer) certificates are active and working;
  • Whether your e-commerce shop is using strong passwords for hosting dashboards, admin accounts, and many more;
  • Whether you encrypt business communication between you and your suppliers, as well as customers. 

As you can see, there are many things to consider when doing security audits. Make sure to tackle the things mentioned above so you can quickly discover any fraud-related threats that can hinder your online business from growing

Lock on the laptop and illustration

Monitor Your E-commerce Store For Any Suspicious Activity

If you’re looking to prevent criminals and fraudsters from committing fraud against your e-commerce business, it can be an excellent idea to monitor your online shop for any suspicious activity. This activity can be anything from inconsistent billing and shipping information to unusual delivery requests and a sudden increase in the transaction volume. 

Thus, to safeguard your e-commerce site from fraud, you can make use of some tools that can help you monitor your efforts and make sure you’ll be alerted for any doubtful online transaction in your shop. 

Only Collect The Data You Need To Complete A Transaction

As an online merchant, you need to ensure all customer data are protected against a data breach or hack. As such, it’s best to avoid getting too much sensitive customer data during an online transaction. 

Make sure you have as little customer data as possible to safeguard your customers from the fraudulent acts of fraudsters. If possible, only collect the necessary information you need to complete the transaction. If Social Security numbers, birthdates, and other sensitive information aren’t required, refrain from asking these details when they do business with you. By doing this, you can prevent them from becoming victims of e-commerce fraud. 

Use Hypertext Transfer Protocol Secure (HTTPS) 

Typically, hypertext transfer protocol secure (HTTPS) is used for sending data between your e-commerce store and a customers’ web browser. With this primary protocol in place, you can encrypt the data to shield sensitive information, including customer names, credit card numbers, and addresses.

Thus, when you use HTTPS, you can stop your online shop from broadcasting your transactions, which makes it easy for fraudsters to view and access them. As a result, you can block any fraud-related activity from harming your e-commerce business.

Conclusion

Realistically speaking, no online merchant can completely eliminate fraud in the system. However, by keeping these fraud prevention strategies in mind, you can safeguard your e-commerce store as much as possible. Although fraudsters are everywhere waiting to attack your site, these ways are available to stop fraud from victimizing you and your business in the long run.