Protect Yourself From These E-Commerce Scams: Part 3 | AllClear ID

Jackie here with Part 3 of our series on common e-commerce scams. We?ve covered some pretty serious scams (like botnets and phishing) in Parts 1 and 2,but we aren?t done yet. This post is the final one in this series; once you?ve finished reading it, you?ll be ready to shop online with confidence knowing the biggest potential threats you face.

E-Commerce Threat #3- Friendly Fraud

Friendly fraud doesn?t sound like much of a threat, but to merchants it can be serious business. It involves legitimate customers that purchase an item or service with their own card and then dispute the charges. The credit card companies will often hold the merchant responsible for the final bill, even when they properly verified the card and the customer actually received the item. While this scam may not affect most consumers, it is always good to be aware of the various scams happening in the e-commerce world.

There are a few things merchants can do to protect themselves from friendly fraud. They include:

• Requiring a Signature Upon Receipt- One way that merchants can protect themselves is to require a signature by the consumer before delivering actual physical goods. Many mail carriers and shipping companies offer this as an option when shipping packages.
• Verify the Security Code- Another way to combat friendly fraud is by requiring consumers to provide the three digit security code found on the back of the credit card. This proves that the consumer actually has possession of the physical card and can be very useful when disputing chargebacks.
• Verbal Signatures- In call center transactions recording a verbal signature before authorizing a purchase can prove that the customer was present and did authorize the charge.

E-Commerce Threat #2- Account Takeover

Imagine discovering that your accounts had been accessed by someone other than yourself. Money was transferred or purchases were authorized, all without your consent. You may not have discovered this was even happening for months because you?ve stopped receiving bank statements and can no longer access your online accounts. This scary scenario is an example of account takeover, or someone else taking control of your financial accounts by adding themselves or changing contact information.

Some of the most common methods thieves employ when engaging in account takeover are to:

• Change the Physical Address for the customer
• Add Themselves as a Registered User
• Change the Email Address on the Account
• Get a Credit or Debit Card Issued in Their Name
• Change the Account Phone Number
• Change the Online Account Password
• Change the PIN on a Card
• Obtain Checks

This form of id theft can be devastating to the financial health of both businesses and consumers. One of the best ways to protect yourself is to keep your personal information safe. Generally thieves gain the initial access to your accounts using your personal information. They may employ tactics like social engineering to gain additional information once they have the first critical pieces. Keep your eyes open for phishing emails and the like since the information thieves garner with them may then be used for account takeover.

E-Commerce Threat #1- Clean Fraud

Clean fraud is a very sophisticated type of online fraud. As businesses develop methods for uncovering and catching id thieves, the thieves continue to get smarter and to develop new strategies so they can continue to profit through id theft. Clean fraud requires thieves that have a lot of personal information and can easily appear as a legitimate customer, even when they are not.

In this type of fraud it may appear that an actual consumer is making the purchase, and these purchases are often automatically making their way through the fraud filters, only to be charged back to businesses when the accounts are ultimately discovered to be fraudulent.

Businesses can protect themselves from this type of fraud by staying involved in the ordering and verification process. It is important for them to carefully analyze each purchase to ensure that it is indeed legitimate. One big warning sign of clean fraud are multiple accounts with the same user id or email address. Another tactic businesses can employ is separating the returning customers from the new ones and holding purchases for a period of time between the order and delivery for new customer.

Being a safe online shopper means being aware of the threats you face online. An informed shopper is a safe shopper and can be one of the worst enemies to an identity thief. For more information check out the scam alert from the IC3 that inspired this post.

Source: https://www.allclearid.com/blog/e-commerce-scams-part-3

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