With eCommerce hitting an all-time high and seeing further growth in the future, the opportunity to get on board and make the most out of the market becomes even more crucial now more than ever. Lucrative and thriving as an online business can be, though, it is not without dangers and pitfalls.
One of the foremost concerns facing online entrepreneurs is merchant fraud protection. In a nutshell, this is payment fraud committed in online transactions. The anonymity offered by the internet makes it a lot easier for those with ill-intent to carry out this criminal action. All they need is an internet connection and a fake identity that they can hide in.
That’s why it’s even more crucial for merchants to take proactive steps for their protection. Fortunately, there are service providers out there that specifically cater to this issue. Before diving into possible solutions, here are the different types of merchant fraud that you should be on the lookout for.
Affiliate Fraud
This type of merchant fraud involves the use of affiliate links, which merchants use to widen their market reach. Affiliates share the link of the online merchant’s website on their own, as per agreement. Every time a visitor on the affiliate’s site clicks on the merchant’s link and makes a purchase, the affiliate site gets a commission out of that sale.
The fraud occurs when the affiliate fakes the activity from their site to the merchant’s s they can gain commission. One of the ways they do this is known as “typosquatting,” which basically refers to registering domain names of commonly mistyped versions of an online store’s actual URL, but then links it to the affiliate.
Credit Card Fraud
This type of fraud is the most common type and is carried out by a shopper. Fraudsters purchase from an online merchant using stolen credit card information. The merchant, who then delivers the product or service, becomes defrauded once the real owner of the credit card used in the transaction contests the item reflected on their card. The merchant would then have to refund the amount charged to that credit card.
Chargeback Fraud
Chargebacks are refunds issued by the merchant upon a disputed transaction. It’s similar to how credit card fraud harms the business, but the difference is that the credit card used in this situation is not necessarily stolen. Instead, the fraudster simply purchases from the online merchant, waits it out a few weeks or months, and then files a claim disputing the transaction in their account.
At this point, the success of the fraud depends on the merchant not bothering to counter the claim anymore and simply paying the chargeback to get it over and done with.
These are but a few of the types of fraud that online merchants have to be careful about. One of the simplest ways to get on top of the situation is to get merchant fraud protection. At the very least, these fraudulent attempts will be prevented, thus protecting not just the merchant’s bottom line but also its reputation and integrity as an online business.
