When you stop to consider the many risks that are possible with online shopping, it’s no wonder that consumers are sometimes reluctant to take the plunge. After all, they are sending their private payment details out into what amounts to a void, trusting that their sensitive data will be transmitted safely and securely throughout the process. To provide your valued guests with peace of mind, there are several steps you can take to bolster your website and render it less vulnerable to a data breach without making the customer experience too complicated.

Types of ecommerce fraud.

Before we look at ways to prevent security breaches, however, let’s first briefly look at the most common types of fraud that you may encounter as an online merchant.

• Email phishing schemes. Emails are sent by scammers to a customer requesting that the person clicks on a link to confirm a delivery or verify account information. If they do, they might download malware or viruses, and your brand’s reputation will take a hit.

• Identity theft. If customers’ details are stolen via phishing or hacking of your non-secure site, criminals can make unauthorized purchases that could deplete and compromise your inventory and damage your good name while simultaneously stressing out your customers.

• Chargeback fraud. In its most common form, a customer orders products, canceling the order after shipping. They then file a dispute with their credit card company claiming that their identity was stolen or the delivery never arrived. That can leave you as the merchant penalized for the dispute, and depleted of inventory.

• Triangulation fraud. The criminal makes a fake listing for a real product at a higher price. A customer “buys” the product after providing payment data. The criminal uses the buyer’s data to purchase the same item at a lower price, sending the cheaper item to them and keeping the difference.

• Affiliate fraud. A scammer can make it look like they have sent more referrals to a website than they really did, meaning that they get paid more than they deserve.

Watch for the red flags.

Now that we have covered the most common types of fraud, we can begin to look at how to avoid it. The best way, of course, is to prevent it from occurring in the first place. To that end, watch for the following warning signs:

• The same item is ordered multiple times.

• Multiple orders are sent to the same address but are paid for with different cards.

• Orders are large, with expedited shipping.

• The purchaser provides odd-seeming email addresses or phone numbers from different area codes.

• Repeated declined transactions occur.

Following your gut and heeding these warnings can halt many crimes before they happen.

1. Maintain PCI compliance.

One of the best ways to minimize fraud is to adhere to the guidelines set forth by the Payment Card Industry Security Standards Council. Abbreviated as PCI DSS, these data security standards provide a framework of best practices designed to protect cardholder data from fraud. Fortunately, most ecommerce payment processing gateways handle this compliance for you.

2. Use address verification and CVV.

The Address Verification Service (AVS) and card verification value (CVV) are included by most payment processors. AVS ensures that the billing address entered during purchases matches the one on file while CVV requires customers to enter the three-digit number on the back of their cards. This helps to prevent fraud that could occur if the thief only had the card number.

3. Require signature upon delivery.

Taking this step might add a few dollars to your shipping costs. However, it provides proof that the package got to its destination. It is difficult for someone to make a believable claim of non-delivery with a signature on record.

4. Follow up on your instincts.

If something seems suspicious about a transaction, spend a little extra time verifying its authenticity. Send a message to make sure that the customer’s email address is valid; call them on the phone; or search for them on social media. Of course, you will only need to take these extra precautions for orders that seem suspicious. 

5. Always use HTTPS.

If you have not done so already, install an SSL certificate that switches your URL from HTTP to HTTPS. This gives the data you transmit an added layer of protection as it travels across the internet to and from your ecommerce site. Using an HTTPS URL also leads to a higher SEO ranking and better referral data.

6. Implement 3-D Secure payments.

The three-domain structure (3-D Secure) payment protocol is designed to help with payment authentication security. Its purpose is to prevent online debit and credit card fraud. The process consists of three players: the issuer (Visa or Mastercard), the acquirer, and the interoperability domain. During the 3-D Secure process, the customer enters their payment information into the secure online form. The directory server is contacted to verify that the card is registered. The 3-D Secure page is displayed to the customer, who then enters a one-time PIN or password. Details are transmitted to the acquiring bank, which either authorizes or declines the transaction and sends the response back through to the payment gateway. Having this system in place increases security and elevates consumer confidence in the process.

7. Use an ecommerce fraud protection service.

When you are multitasking to run your business, fraud prevention strategies can sometimes get moved to the back burner. That’s why many companies are placing the majority of the security burden on third-party fraud protection services. A good one will inspect each transaction as it comes in, validating that every order is legitimate. In addition, it should offer a chargeback guarantee that covers 100% of the costs in the event that your store receives a chargeback from a customer that has been approved by the fraud protection vendor.

8. Keep your security systems updated.

Your operating system needs to be updated whenever a security patch is released. With each new day, criminals come up with creative malware and strategies for breaching systems. If you fail to protect your networks and software with the latest safeguards, you are low-hanging fruit that criminals will jump to exploit. Although ecommerce websites will always represent a certain level of risk for consumers, human ingenuity and cutting-edge technology are combining to make online shopping easier yet safer than ever. By taking steps to bolster your security infrastructure and awareness, you can drastically reduce the likelihood that you and your customers will be the next victims of cybercrime.