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Types of Ecommerce Fraud and How to Prevent Them

With more transactions expected to be made on e-commerce sites, there is an increasing need for ecommerce fraud prevention software. Fraudsters are attracted to lucrative businesses like sharks to blood so both shoppers and sellers need to protect themselves from online fraud.

Choosing the right ecommerce fraud prevention software, however, requires that you understand the risks that you are trying to mitigate. Many people hear about online fraud but do not really understand what they are dealing with. This article will enlighten you about the different threats.

Identity Theft

This is a big problem in 2020. Credit card users are the biggest targets of this kind of theft. The criminals are simply looking for a way of getting as many identities to use for fraudulent transactions. They look for easy targets whose identities can be stolen. Because these are transactions that can be carried out without physical presence, it is easy for these criminals to assume your identity once they have your credit card details.

The main target of this kind of theft is your credit card information. They can get this by setting up websites that seem legitimate and then use the site to collect passwords, names, and addresses which they will use to make transactions online.

Avoiding Detection

This is also referred to as clean fraud. In this case, the criminals will try and avoid tripping the fraud detection alarms by making every transaction they make using your details seem normal. They make sure they have accurate login information and then avoid any patterns that may be suspected to be fraudulent.

Usually, the criminals will start by making small purchases to verify if the information they have will work and when the test is complete, they will move on to the bigger purchases that cost the victim more.


Online stores are the target of this kind of fraud and it can be perpetrated by professional fraudsters or even ordinary shoppers. What usually happens is that the thieves will make genuine transactions and purchase products in bulk but after the transaction, they will request a charge-back claiming that their credit card or account details have been stolen. The retailer has no option but to make the refund but the shopper will have already received the products.

It is common that these criminals will provide fake addresses or locations in the middle of nowhere so that they cannot be traced. They may also use other people to receive the goods on their behalf and later forward them to the thief.

Triangulation Fraud 

This involves three points, hence the name “triangulation”. The first point of this crime is a fake online store that could seem like one of the genuine stores. The fraudsters then go ahead and create an offer that will entice users to make purchases from the store. This will include unbelievable discounts, one time offers for credit card purchases, and so on. Once a user is sucked into this fraud, their credit card details are then taken and used to make purchases from genuine stores.

To cover up the fraud, the criminals will purchase the exact items ordered by their victim and send these products to the victim, after that they can go ahead to use the card details for other purchases that they will keep. This fraud can go undetected for a long while.

Affiliate Fraud 

The fraudsters here will sign up to affiliate programs and then seek to manipulate the system so that they can get paid high commissions. They can decide to set up an automated system that will make it seem like they are sending a lot of traffic to the mother company or they can use friends to visit the site using their affiliate link. The website here will be paying for increased traffic but will not see corresponding conversions because the traffic is fake.

Merchant Fraud 

The common victims of this fraud are the bulk purchasers. Here the user makes an advance payment for goods to be delivered but the merchant takes the money and never ships the commodities.

How to Avoid Ecommerce Fraud?

Knowing the different types of fraud is already a step towards preventing fraud and avoiding being a victim of this crime. Experts also advise that you do the following:

– Merchants must invest in multi-layer fraud prevention software.

– Users need to keep their passwords secure and change passwords periodically.

– Verify the site that you are providing your account information to.

– Choose passwords that are considered strong with numerals and symbols included.

– Invest in protection for your computer with anti-spyware and firewall among other features.

– Follow industry guidelines to make online shopping safe.


Fraud is dynamic, the criminals are always looking for more effective ways to steal from online users. Everyone needs to be vigilant in fighting this crime. The more you learn about it, the better the chances of remaining secure. Never believe that you know it all.

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