Month: June 2024

The momentum of eCommerce is evident all over the world, reaching households in both developed and developing nations and providing a bountiful playground for scam organisations. Recent fraud statistics from the Australian Payment Network revealed that Australians spent $1.055 trillion online in 2023, marking a 15.4% increase compared to the previous year. 

This growth was largely attributed to contactless card payments becoming mainstream, as consumers favour contactless cards for low-value day-to-day transactions. Backing from banks and financial institutions has made contactless payments widely accepted among most retailers in Australia. However, with the surge in card transactions and continued growth in online spending, eCommerce has become a lucrative target for fraudsters. The report also noted a 35.6% increase in card fraud, totaling $675.5 million for the year.

With $73.5 billion of eCommerce revenue lost to payment fraud globally and the cost of chargebacks (or friendly fraud) set to rise to $179 billion this year, businesses must be vigilant. Data breaches caused a 79% increase in account takeovers, while friendly fraud makes up 45% of all scam payments, with some merchants claiming it’s more like 80%. 

The rise in younger customers shopping online using so many methods of payment, including various devices and social media, makes them easier prey to scammers. Cybercriminals are targeting younger shoppers by creating fake accounts and using other nefarious methods as a lucrative pool to steal funds.

While the influx of online shoppers is a boon for eCommerce enterprises, it has heightened the need for quality fraud prevention. Protecting clients from scams is now a top priority for eCommerce business owners. Fake transactions and hacked shopping carts not only impact profitability but also damage brand equity, including reputation and overall customer experience.

For your valued customers, too frequently, online shopping carts provide prolific opportunities for hackers to infiltrate eCommerce websites. Skimming software is used to intercept transaction data at checkouts and payment gateways. So, it’s vital to protect the people who shop with you to foster increased customer loyalty.

In our recent article supported by our partner Kount, an Equifax company and global leader in eCommerce fraud solutions, the LION Digital team delves into the definition of eCommerce fraud. We outline its most common types, review primary prevention principles, and identify tools for detecting and preventing attacks.

DEFINITION AND TYPES OF ECOMMERCE FRAUD

The term “eCommerce fraud” refers to any intentional deception by cybercriminals or fraudsters during an online transaction aimed at financial or personal gain, which negatively impacts businesses. 

There are several types of eCommerce fraud, each with its distinct characteristics and conditions:

1. Credit Card Fraud: Scammers use stolen card information to purchase products or services. The merchant bears the loss since refunds to the cardholder occur after the product has shipped or services have been used.
2. Card Testing Fraud: Criminals test stolen card information on websites by making small test purchases, using bots and scripts to try different data combinations, and making larger purchases when the tests are successful.
3. Friendly Fraud or Chargeback Fraud: Con artists make a legitimate purchase and then request a chargeback from their bank or credit card company, claiming their account was hacked or their credit card details were stolen. Thus, they obtain a refund while keeping the purchased item.
4. Identity Theft: Hackers use data breaches to steal personal data, adopt victim identities, issue credit cards in their names, and make online payments.
5. Account Takeover: Cybercriminals use stolen login details to access eCommerce platforms. These details are often acquired through phishing, where fake emails or messages imitating legitimate companies trick users into entering personal and login information.
6. Interception Fraud: Fake customers place orders with shipping and billing addresses that match the authorised card, then attempt to intercept and change the delivery address.
7. Triangulation Fraud: Scammers create false online stores offering high-quality goods at low prices, attracting victims who unknowingly provide personal information and card details, believing they are making a legitimate purchase.
8. Refund Fraud: Criminals attempt to receive a refund for their purchase by claiming the order never arrived, the box arrived empty, or items arrived with defects, often by sending junk items back or using stolen card details.
9. BOPIS Fraud: Fraudsters exploit buy-online, pick-up in-store (BOPIS) services, making it difficult for retailers to detect fraud since the shipping address is typically not matched with the cardholder’s billing address.

DETECTING ECOMMERCE FRAUD

While each type of fraud has its criteria, there are common warning signs to indicate potential fraud:

1. Multiple orders by the same buyer in a short period.
2. Multiple payment attempts with similar data patterns.
3. Payment attempts from a country different from the shipping address.

PREVENTING ECOMMERCE FRAUD

Ensure PCI Compliance

Follow Payment Card Industry (PCI) standards to guarantee secure online transactions.

Enhance Security During Peak Seasons

Increase vigilance during high-traffic shopping periods to avoid overlooking suspicious activity.

Study Chargeback Data

Analyse chargeback data to understand and address underlying issues that lead to chargeback disputes.

Educate Customers

Ensure your customers are familiar with data security and phishing, and use secure payment methods to prevent fraud.

Assess Fraud Risks for New Procedures

Evaluate potential scam threats before introducing new business processes or expanding into untried markets.

Partner with Fraud Prevention Experts

Work with trusted fraud prevention partners like Kount to protect against scams and recover losses swiftly and efficiently.

Protecting your eCommerce business from scammers is crucial for maintaining profitability and ensuring a positive customer experience. By understanding the types of fraud, being vigilant for alert behaviours, and implementing preventive measures, you can safeguard your business and customers from cybercriminals.

Kount: eCommerce fraud prevention that is easy, effective, and accurate

Article by

JENNIFER MCCARTHY –
DIGITAL CONTENT MANAGER

In the fast-paced digital realm, the way eCommerce customers search for and consume information is evolving more and more rapidly. Gone are the days when traditional search engines were the sole gatekeepers of online information. Today, there are so many more ways to target what you’re looking for online, which impacts the search experience and how organisations implement their campaigns. In the Second Part of our blog series on the evolution of online search, we’ll explore the shifting landscape beyond traditional search engines and how you can leverage these changes for your business.

The Rise of Social Media as a Search Engine

Social media has transformed from mere tools for social interaction into powerful search platforms in their own right. Platforms like Instagram, TikTok, Facebook, and Twitter are now hubs for news, reviews, recommendations, and real-time information. Users no longer just connect with friends; they search for products, services, and answers to their eCommerce enquiries on these platforms. Savvy eCommerce businesses and entrepreneurs can leverage social media to showcase their offerings, gather customer feedback, and engage with their audience more meaningfully.

User-Generated Content: A Game-Changer in Online Search

User-generated content, such as reviews, ratings, and comments, has become a cornerstone of online search. Platforms like Yelp, Trustpilot, and TripAdvisor aggregate user reviews to provide valuable insights for consumers. Clever retailers and entrepreneurs can use this feedback to improve their products and services while building confidence and loyalty with potential customers. By actively managing their online reputation and encouraging customers to leave reviews, businesses can enhance their visibility and credibility in the eyes of consumers.

Vertical Search Engines: Niche Markets, Targeted Results

Vertical search engines cater to specific verticals such as products, services, jobs, and local business listings. These specialised search engines, like Amazon, Google Shopping, SEEK, and Expedia, offer highly targeted and relevant search results tailored to the user’s intent. Smart eCommerce organisations and business owners operating in niche markets can optimise their presence on these platforms to increase their visibility among their target audience and drive conversions.

Artificial Intelligence: Advances in Information Retrieval

While AI is not a straightforward alternative to Google, Bing, Yahoo!, and other search engines, there is search potential in large language models like ChatGPT, Gemini, Bert, and others as they can enhance user experience. Depending on what the user is searching for, AI can deliver more intuitive, conversational responses that are easier to digest when searching for large chunks of information or explanations. Google still dominates real-time search results, as AI uses stored data to deliver results. 

Search engines are designed to crawl, index, and scour web page indexes to deliver relevant, up-to-date search results from the internet based on keywords and query relevance. Whereas ChatGPT relies only on its knowledge base and training data to generate human-like, contextually relevant, and natural language responses based on input. For example, ChatGPT cannot tell when the flight departs, but it can provide summaries and explanations of aircraft and airport logistics. 

The natural next step in search evolution is integrating LLMs into search engines. In May 2024, Google announced the planned global rollout of “AI Overviews.” The goal is for billions of Google users to see an AI-generated summary at the top of their search results, which Google representatives claim is only the beginning. Thus, rather than replacing search engines, large language models employing AI and Natural Language Processing algorithms would help improve the user’s search experience.  

Points to Consider: Maintain Your Business Focus

Engagement is Essential: With social media and user-generated content, engagement is crucial. E-tailers and entrepreneurs should focus on creating compelling and shareable content that resonates with their audience.

Consistency is Key: Consistency in branding and messaging across all platforms is necessary for building a strong online presence and brand identity.

Analytics and Insights: Utilise analytics tools to track the performance of your campaigns and comprehend what resonates with your audience. This will help you refine your strategies and improve your results over time.

Keep Abreast of AI Advancements: Follow field updates and integrate AI into your business strategy in the early stages. 

To stay ahead, retailers need to be flexible enough to adapt rapidly to the latest developments in online search. By leveraging social media, user-generated content, vertical search engines, and AI tools, eCommerce brands can enhance their online visibility and audience engagement to drive business growth.

At LION Digital, we understand the challenges of the eternally evolving online search landscape. Our team of experts can help you develop and implement strategies to optimise your digital presence across all the abovementioned platforms. From content creation and social media management to search engine optimisation and AI, we have the eCommerce expertise to help you achieve your digital marketing goals.