Nearly a decade ago, theft was commonly associated with brick-and-mortar stores. However, with the rapid advancement of technology, theft has now shifted to online stores as well. Digital thieves are constantly seeking opportunities to breach online security measures. One prominent example of this is e-commerce fraud, which has become a significant threat in the modern consumer landscape. This article will delve into the details of e-commerce fraud, its various types, and its global spread.
E-commerce fraud is a broad term that encompasses a wide range of online scams. It refers to fraudulent activities that involve the illegal use of customer personal information and transactions conducted on online platforms. In simpler terms, it refers to scams related to e-commerce transactions. Let’s explore how these scams have emerged as a major threat.
The rise of e-commerce fraud can be attributed to the fact that billions of people around the world use the internet, and a large number of them engage in online purchases. This widespread online presence has created a fertile ground for fraudulent activities. Here are some reasons behind the increase in e-commerce fraud:
1. Simplicity: Compared to theft at physical stores, e-commerce fraud is relatively easier to execute. Hackers only need basic hacking tools, skills, and data collection to carry out their attacks. Stolen credit card information is readily available on the dark web, making it effortless for fraudsters to engage in e-commerce fraud. The ease of execution has made e-commerce fraud a serious threat to user security.
2. Hidden identities: One of the main reasons for the rise in online fraud is the ability for scammers to maintain hidden identities. When browsing a website, owners can gather information like email addresses through browser cookies. Hackers can adopt anonymous identities and perpetrate scams from anywhere without the fear of being identified. This lack of a specific identity provides them with a sense of security, as they can operate without the risk of being caught on camera or leaving identifiable traces.
3. Lower chances of detection: In a traditional robbery scenario, there are multiple risks involved, such as security cameras, store owners implementing security measures, and the possibility of getting caught by the police. However, online scams offer scammers a lower chance of getting caught. This lack of physical presence and surveillance makes it easier for fraudsters to carry out their activities without immediate consequences.
Now, let’s explore the various types of e-commerce fraud:
1. Identity theft fraud: This type of fraud involves hackers impersonating individuals and using their personal information to commit cybercrimes. Many users do not apply two-factor authentication, making them easy targets for hackers to steal their identities and carry out unauthorized transactions. According to a Javelin Research Study, traditional identity fraud losses amounted to $24 billion in 2021, affecting 15 million U.S. users.
2. Credit card fraud: Credit card fraud is a prevalent form of e-commerce fraud. Scammers hack into systems to steal credit card information or purchase it from the dark web. They then test the stolen cards with small purchases before making larger, noticeable transactions. This type of fraud has seen a rise, with 150 million credit card fraud cases reported in 2021, up from 127 million the previous year.
3. Account takeover fraud: Account takeover fraud involves hackers sending scam emails with malicious links. Once the victim clicks on these links and logs in, the hackers gain access to their email and password. Some fraudsters even purchase passwords and account data from the dark web to carry out this type of scam. They take over accounts and use them for unauthorized purchases across different online stores.
4. Chargeback fraud: Chargeback fraud, also known as friendly fraud, is increasing rapidly. The cost of chargebacks is predicted to reach $117.47 billion by 2023. In this type of fraud, a buyer makes a purchase, receives the products, and then requests a chargeback from the payment processor, claiming invalid transactions. This results in the fraudsters keeping both the ordered items and the money, causing significant financial losses for store owners.
5. New account fraud: New account fraud was prevalent in 2022. Scammers steal personal information to create new bank accounts or obtain new credit cards, which they then use for illegal purchases. The dark web serves as a common medium for selling and acquiring the necessary information.
These are just a few examples of the many types of e-commerce fraud that exist. Detecting and preventing e-commerce fraud is crucial. Some red flags to watch out for include inconsistent data, unusual order amounts, shipping to unfamiliar locations, and sudden address changes. Monitoring these indicators can help identify potential fraud attempts and protect against financial losses.
E-commerce fraud is a growing concern in today’s digital world. By understanding its various forms and implementing effective security measures, both consumers and businesses can mitigate the risks associated with online scams and protect their personal and financial information.