Fraudulent activities have drastically impacted the operation of online businesses. These impacts can be monetary as well as non-monetary. The present world is full of scams lurking around the unseen corners of the online platform. Running a business online comes with all sorts of problems and difficulties. Online payment frauds are one of the difficulties encountered that can be prevented by adopting appropriate countermeasures.
Online Payment Fraud
In a world involving digitally-driven platforms, online payment fraud is a recurring threat to everyone making use of the card-not-present transactions. It is a criminal act of deception with the intention of personal or financial gain. With passing time, cybercriminals are being more creative in their fraudulent activities. To resolve these issues, the only solution is the adoption of a systematic procedure.
Types of Online Payment Fraud
There are four different types of online payment frauds which are explained below for an easy understanding.
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Friendly fraud
This type of not-so-friendly fraud occurs when customers contact their credit card issuers to claim a dispute against that purchase. Some common claims placed by customers are:
- The Item not delivered
- The item returned without a refund
- No purchase made
This is the most popular online payment fraud causing direct loss of merchants and end up getting penalized by card issuers.
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Triangulation
This type of fraud involves three participants for any product purchase. This usually happens at the sites that sell high-priced products at a fraction of the price. The three participants who are involved in this kind of purchase are:
- The unsuspecting customer
- The fake online store
- The stolen data
In this situation, the customer has made a purchase but an imposter immediately steals all the credit card details to gather data and cancel the payment.
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Clean Fraud
A type of fraud in which the imposters know a great deal about the cardholders and use their real data for fraudulent purchases. In clean fraud, cybercriminals use real information and credit card details to fool the payment providers.
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Identity Theft
The most common type of online payment fraud is identity theft. This is done by cybercriminals when they penetrate personally identifiable information through old security systems. In this way, they are able to make fraudulent transactions anywhere.
Online Payment Fraud Management
Frauds can cause massive havoc in business and compromise reputation. There are few important fraud management ways that can be adopted.
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Partner with a Verified Payment Processor
Being partners with a verified payment processor is important for any business as well as cardholders. Always pair with partners who have security and fraud prevention strategies in place.
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Security Measures
Adopt the highest level of assessment standard to provide a secure way of online payments. All the sensitive and personal information must be in compliance with the ‘Payment Card Industry Data Security Standard’. Ensure that the exchange of information in the browser is safe and untouched. Along with that, card issuers must ensure that cardholders have kept strong passwords on their accounts.
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Anti-virus Software
Avoid entry of imposters to your gadget by installing authentic anti-virus software easily available online. This software needs a regular update for added protection. Install necessary firewalls to protect against network penetration.
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Tools for Fraud Management
The verified online payment providers have a fraud management solution. They employ tools to better protect their clients. These tools work by providing analytical models to predict frauds and manage them in real-time.
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Regular Staff Training
The majority of online payment frauds are a result of inexperienced staff or their lack of knowledge. Imposters mainly target weak staff in order to get into systems. Being unaware of the latest techniques, the weak staff gives an easy way for fraud occurrence. To avoid such an issue, it is beneficial for the business to give regular training to staff regarding fraud prevention and management.
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Awareness of the Latest Fraud Trends
Stay up to date with the latest new frauds and fraud prevention processes. Each time we tend to think that we have all the frauds figured out, there is always room for more. Therefore it is key to revise fraud prevention strategies and update network security systems. The potential fraudsters are always in the loop to tear down your business. It is important to take possible measures for fraud management. The more fraud detection measures adopted, the more secure your network is.
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Avoid Phishing
Phishing is phony emails, letters, or texts that claim your card details. The links present in them are ways for imposters to install malicious software in the device. Always remember that banks never ask for such pieces of information. The cybercriminals hope cardholders will voluntarily give their personal information without an issue.
Fraud Prevention Tools for Online Payments
Some of the most effective fraud prevention tools for online payments are:
- Address Verification Service (AVS)
- Card Verification Value (CVV)
- Device ID
- Fraud Scoring Model
- 3D-secure
Concluding Remarks
Professional payment providers have access to big data and algorithms that can easily predict and prevent future frauds. Stay vigilant and protected from online payment frauds.