Australia is the 11th largest e-commerce market globally, with sales expected to reach $32.3 billion by 2024. This equates to an annual increase of 15.5 percent.
New Zealand, with a population of just 4.5 million, is the 46th largest e-commerce market globally, valued at $4.6 billion in 2021. This was a 15 percent increase in revenue from the previous year.
This spike continues a trend that first accelerated during the pandemic as the world turned to online shopping. The companies that survived and thrived during shutdowns were the ones that quickly flipped their business models to support digital commerce.
Unfortunately, the increasing popularity of digital commerce has also sparked a wave of online fraud among businesses worldwide. Bad actors follow the money trail; right now, digital trading is at the epicenter.
Retailers should be aware of three common types of fraud: card testing, account takeover, and chargeback.
Card Testing Fraud
In card test fraud, the fraudster obtains credit card numbers illegally. Usually, fraudsters receive these numbers by stealing them directly or buying them over the dark web.
Card test fraud starts with smaller ‘test’ transactions. The fraudster will try smaller purchases with each card number to determine valid ones without drawing too much attention. Smaller purchases also help determine the limits on each of the credit cards.
After the first tests, fraudsters start making larger purchases. When many traders discover what happened, the fraudster has made several major purchases.
Account takeover fraud
Bad actors have several methods they can use to access customer accounts. Buying stolen passwords and security codes, obtaining customer information from the Internet, and implementing phishing schemes are just some of the tactics at their disposal.
Once the account is taken over, fraudsters are now ‘the customer, allowing them to:
Change account details Make purchases Withdraw money (if this functionality is present) Access other accounts owned by the user
Account takeover fraud is essentially a form of identity theft.
Once a customer’s account information is compromised, that supplier relationship is over. In addition, the media often highly reports account takeover fraud, so breaches will significantly negatively affect the company’s goodwill and credibility. This makes account takeover one of the most damaging forms of ecommerce fraud.
Chargeback Fraud
Chargeback fraud occurs when a customer purchases a product or service and then contacts their credit card company to reverse the purchase, resulting in a “chargeback”.
Chargeback fraud also involves additional complexity, as in certain circumstances, it can result from a legitimate purchase that is simply not recognized by the customer.
This particular case is often referred to as ‘friendly fraud’. However, friendly fraud is no less damaging to merchants and can still negatively impact business and customer relationships.
Some fraudsters intentionally commit chargeback fraud by abusing company policies to get items for free, knowing that the purchase will be refunded to their credit card.
Chargebacks cost businesses a lot of money in several ways, including:
Chargeback costs Lost goods Shipping costs Fines and administrative costs Bank fines
While staying on top of fraud trends is important, it’s even more important to approve all legitimate buyers. While the loss of revenue from fraud is $1, the loss of income from false declines is $30. The most reliable way to protect a business is with a digital commerce trust platform that identifies and prevents fraud and enhances a business’s buying experience. The customer optimizes.
An effective, automated solution will allow the company to approve more legitimate transactions and avoid false rejections, which will significantly impact profits.
