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E-commerce Frauds to Watch Out For

  • Highlights

  • 1.16 million cyber security cases were recorded in 2020, 3 times that of the 2019 cases

  • The E-commerce shift has fast-tracked due to COVID-19, increasing the avenues for fraudulent transactions

Businesses have increasingly moved online and the pandemic has only accelerated this shift. Where on one hand, it offers convenience by bringing a range of services to your fingertips, it also increases the avenues for fraudulent activities.

A growing fraud is the E-commerce fraud in India and it comes as no surprise that scammers have found innovative ways to deceit business owners and online shoppers on the internet.

Types of frauds in E-commerce

The Indian government logged in 1.16 million cyber security cases in 2020 which was three times that of 2019. A part of these numbers can be attributed to various types of frauds in E-commerce such as:

  1. Card Testing Fraud
    Card testing fraud is also known as card cracking by some and is a common tactic used to defraud E-commerce companies. Here the fraudsters get their hands on multiple stolen credit card account numbers and test these cards by making small purchases on the website. The ones that go through successfully are then used for more expensive purchases. The initial purchases are of insignificant value and often go unnoticed by both the merchant and the actual card member.


  2. Friendly or Chargeback Fraud
    When a buyer disputes the charge which they actually intended to make, it is called a chargeback fraud. When the charge appears on the statement, the fraudster calls the payment processor and claims that the charge was unauthorized (knowing very well that they made it) and requests a chargeback. The credit card companies credit the disputed amount to the customer and charge it back to the E-commerce company.
    Sometimes, the person cannot genuinely recognise the charge and they dispute it, which is why it is called friendly fraud.

    Friendly or Chargeback Fraud


  3. Refund Fraud
    Refund fraud is when a purchase is made on an E-commerce website by the fraudster using a stolen credit card, and then they cook up a reason requesting a refund into a different account. The excuse is either accidental overpayment or that the old card is no longer in use, which appears to be a legitimate reason but actually steals money from the business.


  4. Identity Theft or Account Takeover Fraud
    Account takeover fraud is a type of identity theft where the fraudsters gain illegal access to a user’s account. They do this by either using the phishing tactic, obtaining stolen passwords, personal information, or security codes and leveraging this data to access the users' accounts. Once they get access, they engage in all sorts of deceitful activities.


  5. Interception Fraud
    Interception fraud takes place when scammers place orders on an E-commerce website, using the shipping and billing address that match the information connected to the stolen credit card. After placing the order, they intercept the package by calling customer care and requesting an address change, so that the goods get delivered to them.


Steps to Prevent E-commerce Fraud

The progressive cyber regulations in India put the country in a better position as compared to most. The government has mandated anti-fraud protocols such as two-factor authentication and a national toll-free cyber fraud hotline (155260). However, a few steps can help go a long way.

  • E-commerce businesses need to incorporate a stringent fraud protection strategy to mitigate the dangers of cyber fraud. This will also instill a sense of confidence in the customers while they purchase on those E-commerce sites.

    Steps to Prevent E-commerce Fraud
  • Regular website audits should be conducted to ensure that all plugins, software, and certificates are up to date.

  • As for the buyers, we at Bajaj Finserv keep stressing the fact that financial and personal confidentiality of the highest level must be maintained. One must >not disclose CVV, OTP, PIN, and credit card numbers, or their accounts can be compromised.

  • Try and limit the information you disclose on social media and public profiles, as a lot of security question hints and trust-building tactics come from this information.

Remember it's better to be safe than sorry!
Savdhaan Rahein. Safe Rahein.

Read more:
• Cautionary Note - https://www.bajajfinserv.in/cautionary-notice-new.pdf
• Infosec Page - https://www.bajajfinserv.in/infosec-pages
• Fraud Awareness Blog - https://www.bajajfinserv.in/insights/fraud-awareness

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