12 Tips for Preventing Fraud and Counterfeits in eCommerce

As e-commerce grows, so does the risk of fraud and counterfeiting. This can lead to lost revenue, damage to your brand’s reputation, and waste resources that could be used to grow your business. 

To protect yourself from fraudulent transactions, staying up-to-date on industry laws and regulations and incorporating practices designed to reduce fraud in your eCommerce operations is important. 

Here are some tips for preventing fraud. With these tips, you can help ensure secure transactions for you and your clients, helping you protect and build your e-commerce business. 

Conduct Regular Site Security Audits

Conducting regular security audits helps identify potential areas of vulnerability and allows you to address and fix these issues before they become bigger problems. During a security audit, experts examine firewalls, malware protection, and system encryption. They also review account creation protocols and access privileges to ensure no unauthorized person can access important customer data. 

Make your store PCI-compliant.

PCI, which stands for Payment Card Industry, is a security standard designed to protect customers’ information when they use their cards to make purchases. The PCI standards were developed to safeguard customers against data breaches or identity theft. 

The regulations require companies handling card payments to carry out regular security measures, such as Penetration Testing and Vulnerability Scanning, to remain compliant with PCI standards. 

As an added layer of protection, these organizations are audited by an outsider once a year to guarantee that the systems remain secure from malicious actors. Complying with the Payment Card Industry Data Security Standard helps you mitigate the risk of payment data leakage, allowing your customers to transact safely.

Set Product Volume Limits

Establishing volume limits may not completely stop fraudulent activities, but it gives retailers more oversight by allowing them to limit the levels of risk associated with online transactions.

These limits are set per customer, credit card number, or IP address and act as a safeguard against customers committing illegitimate activities. By setting these limits, businesses can quickly detect sales trends that could lead to fraudulent activities, such as wrong chargebacks and order cancellations. 

Monitor Your Transactions Regularly 

One of the best ways to prevent fraud is to regularly monitor your transactions. You can spot discrepancies quickly and act accordingly by tracking your sales and customers. For instance, regularly checking your online statements can help reduce your chances of unauthorized charges. Fraudsters often make smaller charges on an account, making them less likely to be noticed. 

By regularly reviewing your spending and account activity, you can quickly identify if any fraudulent activity has taken place. Once you notice suspicious activity, you can cancel your credit card or inform the bank of the suspected fraud before the issue gets out of hand. 

Use an Address Verification Service (AVS).

An Address Verification Service (AVS) can help verify that a customer’s billing information matches their credit card issuer. By verifying address information such as street number, city, state, and zip code, AVS helps confirm that the person making the purchase is actually who they say they are. 

This increases the security of your transactions when you sell on Depop and other platforms, and it can also decrease chargeback rates, resulting in higher profits for you as the merchant. 

Use Hypertext Transfer Protocol Secure (HTTPS).

By promoting the secure use of data, HTTPS creates a layer of encryption for user transmissions. This protects against malicious networks or connections that can intercept sensitive information like credit card information, valuable customer data, and passwords. 

HTTPS also allows vendors to ensure the authenticity of their website content, which helps reduce the sale of counterfeit products and services. HTTPS requires each transaction to be authenticated using digital certificates on both ends so that detected fraudulent activities can be quickly identified. This makes it much harder for anyone to access a site’s content without proper authorization unlawfully. 

HTTPS technology provides an essential safeguard when transacting online and is essential in ensuring the integrity of eCommerce operations.

Use Card Verification Value (CVV) Numbers

Requiring customers to provide Card Verification Value (CVV) numbers when making online purchases helps eCommerce websites verify the authenticity of their customers’ payment information by comparing it against the data held by their payment service provider. 

This prevents people from successfully creating counterfeit credit cards and attempting to use them for malicious purposes, such as illegitimate purchases or financial theft. You can also offer an extra layer of protection by requiring two-factor authentication for any purchase made on your website. 

Use a Reputable Payment Processor 

A reputable payment processor will have a stake in ensuring that transactions are conducted safely and securely, as they could potentially suffer significant losses if fraudulent activities occur. 

By leveraging the various technologies established payment processors offer, your business is better equipped to detect suspicious activity, verify customer identity, protect customer data privacy, and automate compliance with industry regulations. 

Educate Yourself 

Preventing fraud and counterfeits in eCommerce starts with understanding how these things can occur and how to detect them. Educating yourself on the multiple types of online fraud, such as identity theft and payment card scams, is a great first step toward prevention. 

You should also be aware of items that may be counterfeit offerings or look-alikes of popular products that don’t offer the same quality or warranty. Additionally, research any businesses or sellers you are working with to ensure they are legitimate entities based on reviews or reports from other shoppers. 

With a little knowledge about how fraud and counterfeits happen in eCommerce settings, it is possible to create a secure and enjoyable online shopping experience for all involved.

Avoid Non-Physical Shipping Addresses. 

These addresses are not linked to a physical location and are usually used by customers to receive items without a trace. It is important to be wary of such addresses as they can provide criminals with anonymity, making it difficult, if not impossible, to track down any fraudulent activities or items purchased. 

To reduce the risk of fraud and counterfeiting, you should ensure that your business has a secure and comprehensive verification process before processing orders involving non-physical shipping addresses. 

Only Shop On Secure Websites 

Only make purchases on secure websites with an SSL certificate to prevent fraud. An SSL certificate authenticates a website and enables encryption between visitors’ browsers and the website, allowing for secure transactions. 

Look for “https” at the beginning of a website’s URL address and the lock icon in your browser, as these indicate an SSL certificate is present. Be aware that fake websites may replicate legitimate-looking secure URLs, so always research the company before shopping with them. 

Compare Prices Between Different Sellers 

One easy way to help prevent fraud and counterfeiting is to compare prices between different sellers. By comparing prices, you can ensure that you get a quality product at an affordable cost from a reputable seller. 

It is also essential to check feedback from other customers who have purchased from the seller. You should always be aware of suspicious activity, like excessively low pricing, which could indicate a scam or counterfeit product. 

Conclusion

As an eCommerce business owner or online shopper, you will likely face fraud and counterfeits at some point. Some helpful fraud prevention tips include conducting site audits, setting product volume limits, monitoring your transactions regularly, using an address verification service (AVS), and requiring card verification value (CVV) numbers. You can also effectively prevent these issues by understanding fraud and how to prevent it, shopping on secure sites, and using reputable payment processors.