Best practices in anti-fraud activities

Anti-fraud: key actions every Partner should implement

Combating online fraud (fraud) is one of the most important aspects of e-commerce activity. With the increasing number of online transactions, dishonest users are becoming increasingly creative in their use of a variety of fraud methods. To protect your business from fraud losses, your partner must implement effective preventative measures and respond to suspicious activity in real time. Here are key practices to help minimise the risk of fraud.

The most common types of e-commerce fraud

Understanding the most common types of fraud allows them to be countered more effectively. There are currently five most common forms of fraud in the online payments market:

1. Card Testing - fraudsters use stolen card details to perform many small test transactions to check which cards are active.
2. Friendly Fraud - customer makes a purchase and then reports the transaction as unauthorised in order to obtain a refund.
3. Account takeover) - criminals hack into a customer's account and make purchases in their name.
4. Refund Fraud - abusing the returns process, e.g. by reporting goods not received or by impersonating a customer to defraud.
5. Triangulation Fraud - The fraudster sells the product at an attractive price and then uses the stolen card details to buy it from a real shop and send it to the customer, leaving a trail of fraud in the innocent retailer's wake.

Use of risk analysis and fraud detection tools

Today's payment solutions offer a range of analytical tools to monitor transactions in real time for suspicious patterns. Tools based on artificial intelligence and machine learning are able to detect anomalies that may suggest fraud, such as:

• Transactions at unusual times
• Transactions from new or changing IP addresses
• Unusual geographical locations
• Low card verification rates

Regular use of risk analysis and transaction monitoring tools is the best way to detect potential fraud before losses occur and maintain full control of your shop's payment security.

Strong user identity verification (KYC - Know Your Customer)

One of the best ways to reduce the occurrence of fraud is to implement customer identification processes from the registration or transaction stage. Suggested methods include:

• Two-factor authentication (2FA): By using an additional verification step (e.g. a code sent by SMS), we reduce the risk of someone taking over a user's account.
• Document verification: In cases of higher transaction values or new users, it is worth implementing verification of identity documents or proof of address.

Use secure payment methods

Choosing the right payment methods is one of the easiest ways to protect your shop and customers from fraud. Many modern payment systems have built-in security mechanisms - it is worth enabling them and monitoring them regularly.

What to look out for:

• Secure storage of card data: if you use a payment provider, make sure that it is the one who stores the card data. The data is then replaced by a so-called "token" - a random string of characters that does not allow anyone to read the real card number. This ensures that even in the event of a hack, customer data remains safe.
• 3D Secure verification: is an additional confirmation of the customer's identity (e.g. in a banking application or by SMS), which significantly reduces the risk of card fraud.
• Proven payment provider:use companies that are security certified (e.g. PCI DSS) and offer anti-fraud tools.

Monitoring returns and complaints

Fraudsters often use returns and complaints processes as a means of fraud. Regular monitoring of these processes allows early detection of patterns that may suggest fraud, such as frequent return attempts, unannounced changes of delivery addresses, etc.

Staff training

When working with staff, it is worth investing in fraud detection training and recognising suspicious transactions. Often it is customer service staff who can spot early signs of fracas, for example through strange customer behaviour or odd questions about return policies.

Safety rules for customers

Not only the company, but also your customers need to be educated about the dangers of fraud. Inform them of the necessity:

• Use of strong passwords
• Avoiding the use of public Wi-Fi networks when making online transactions
• Report suspicious transactions or activity relating to their account

System and security updates

Always ensure that your online shop software, payment platform and any applications you use are kept up to date. Regular security patches help avoid known vulnerabilities being exploited by cybercriminals.

Additional practical guidance

• Limit the number of payment attempts from the same card or IP address. For new or unverified customers, you can set a maximum value for a single purchase - a simple way to reduce the risk of loss in a potential fracas.
• Require delivery confirmation for high-value orders.
• For large orders from new customers - carry out manual verification.
• Maintain regular contact with your payment service provider - they can pass on information about new fraud trends and risk patterns.

Summary

Combating e-commerce fraud is a process that requires constant vigilance. By implementing the above practices, you can significantly reduce the risk of fraud, thereby protecting your revenue and reputation.

If you would like to learn more about how to protect your business from fraud or need help implementing effective anti-fraud solutions - please contact us. Our team will be happy to advise you on how best to secure payments in your shop.