External fraud is the enemy of all businesses. It can be argued that internal fraud is also an enemy of business, but this article will focus on common types of fraud that customers commit against a variety of e-commerce businesses - especially ones that sell tangible items that need to be shipped. Knowing what people do to trick businesses out of their own products (and time) can help defuse these techniques. How much is customer-driven ecommerce fraud costing online businesses? Customer-driven fraud cost merchants billions (with a “B”) every year. Some reports and statistics show that the level of fraud exceeds 10 Billion each year. Where online business really feel the pinch is with “charge-backs”. When the payment processors receive a complaint from a customer - they tend to believe the customer. Keeping investigation time to a minimum they typically process a charge-back transaction again the merchant. More often than not it is the merchants who are getting the short end of the stick. Customer-driven fraud has been on the rise. It has simply been easier for the payment processor to screw the merchant - even when the facts points the other way. Also, online transactions are often “card-not-present” situations, therefore making online stores particularly vulnerable to “stolen-card” fraud too. One type of fraud, particularly on the rise, occurs when scammer-customers order physical (or digital) goods, with the covert intentions to make a false claim to their bank (or even their victims bank) that products were “not delivered” - and fraudulently demand a charge-back. Fraud stings online merchants of all kinds, no matter how big or how small. In fact, it is on the rise in online world because E.M.V. [ (E)uropay, (M)astercard, (V)isa ‘smart card’] controls have made it more difficult to commit fraud over the counter. So thieves have been shifting their energy to e-commerce storefronts - which are more vulnerable to credit card fraud. [ EMV is a technical standard for smart payment cards and for payment terminals and automated teller machines that can accept them. EMV cards are smart cards (also called chip cards or IC cards) that store their data on integrated circuits in addition...
