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Ecommerce Fraud Protection: What You Can Do to Protect Your Online Store


Online shopping is increasingly popular, with total retail ecommerce sales in the U.S. projected to exceed $1 trillion by 2022. That’s a substantial number of Crocs (or whatever people are buying these days).

In 2021, ecommerce merchants reported, on average, 824 attempted fraud attacks per month – more than twice the amount compared to 2020. No matter how many customers a store has, it is essential for business owners to ensure their sites are secure and that their customers remain protected from any scams. If not, it can result in devastating profits, customers, and reputation losses. Therefore, a comprehensive fraud prevention plan is essential for any online store owner looking to grow their business safely and securely. This article will explore the concept of ecommerce fraud and its various forms. We will also advise on preventing it and the most effective software solutions from protecting your business from fraudulent activities.

 Get Ready; Let’s Get Started!

The online retail environment has opened up opportunities for many entrepreneurs, yet it has also created an avenue for scammers to exploit. A fraudulent individual can now acquire stolen credit cards without the hassle of having physical payment cards in their possession.

On top of that, loopholes in protocols, such as refund policies and weak passwords, allow them to continue their schemes undetected. Unfortunately, businesses suffer the most from ecommerce fraud, as customers can request refunds from their credit card providers, leaving them without inventory and money. Moreover, such fraudulent activity erodes customer trust in the website, making them less likely to purchase again or even visit the site at all. 

To Better Comprehend This Issue, Let’s Look At Some Of The Usual Tactics Used By Scammers

Ecommerce fraud, commonly called payment fraud, encompasses any fraudulent activity during an online transaction. This could involve stealing credit card details or identity theft, typically perpetrated to gain monetary benefit for the perpetrator over the merchant. Various types of ecommerce fraud exist, all of which are intended to generate a profit at the merchant’s expense.

Types of Ecommerce Fraud


Types of Ecommerce Fraud

Ecommerce fraud can come in many forms, with criminals continually coming up with new and creative ways to outsmart the security measures on ecommerce websites. However, some well-known fraud methods remain prevalent, and it is crucial to be aware of them so they can be spotted quickly. Here are some of the most common types of ecommerce fraud

Account Hijacking Fraud

In an account takeover attack, a fraudster obtains access to a person’s online account and utilizes the stored payment information for unauthorized purchases. Cybercriminals commonly employ this form of identity theft.

Attackers can gain access to accounts in various ways, but most attempts involve deceiving users into voluntarily providing their login details. A popular approach is phishing, where a hacker impersonates a reliable company or individual to dupe someone into giving them confidential data.

Phishing attacks are usually sent through emails or text messages, involving hackers posing as customer service representatives and soliciting login credentials or credit card information.

Hackers may also offer links to malicious websites in the same messages or to fake login pages requiring users to enter their usernames and passwords. The emails may even contain links that lead to websites containing viruses or malware.

An example of a phishing email disguised as a legitimate company could look like this: 

Customer information can be acquired illegally by phishing, buying on the black market, guessing passwords, or in some cases, having their credentials exposed due to a cyberattack.

Account takeover fraud aims to access a user’s account and use it for fraudulent purchases. Additionally, the fraudster will alter the credentials so that the legitimate account holder cannot take any action to stop them.

Chargeback Scams/Frauds

If an online purchase arrives in damaged condition or does not arrive, a customer can get their money back by filing a chargeback with the credit card provider. However, chargeback fraud occurs when a person seeks to exploit this system by falsely stating that they did not receive their order, it wasn’t very correct, or the purchase was not authorized.

Additionally, friendly fraud can occur when a customer unknowingly files an invalid chargeback, such as a purchase made by another family member without the customer’s knowledge. They may demand a refund for a recurring charge that went undetected. Unfortunately, it is often hard to differentiate between legitimate and fraudulent claims, resulting in merchants suffering losses due to both.

Triangulation Scamming

Scammers use a process called triangulation to steal a customer’s payment information. It involves setting up a fraudulent online store and listing products for higher prices than legitimate retailers. Then, customers purchase the product from the fake store – in reality, they provide their financial details to the scammer.

The fraudster then uses the stolen payment info to buy the identical product from a legitimate store at a discounted rate, sending it to the customer and keeping the difference.

The most significant advantage for scammers using triangulation schemes is that it is difficult for customers to detect. Customers believe they have bought a product online and received it without realizing they were overcharged. Furthermore, their stolen information can be used for future fraudulent purchases.

Triangulation ScammingAffiliate Misrepresentation Fraud

Affiliate marketing enables companies to award referral credit to those who suggest their goods to customers. Whenever a buy is made through an original affiliate link, the link owner gets a commission on the sale.

Affiliate programs are an effective way for merchants to promote their products via partners. Regrettably, affiliate programs can be exploited by scammers. With affiliate fraud, a scammer may pretend to be a legitimate affiliate and direct automated traffic through their affiliate links to generate commission. Criminals may also use stolen credit cards to carry out fraudulent purchases with the affiliate program.

Ecommerce Fraud Prevention Strategies and Guidelines

  1. Search for Signs of Online Fraud.
  2. Achieve Payment Card Industry Requirements.
  3. Demand the Cvv Number on All Orders.
  4. Include an Address Verification System.
  5. Secure Your Website With Https.
  6. Ensure Proof of Delivery is Provided.
  7. Set Up Secure Passwords for Customer Accounts.
  8. Restrict Purchase Amounts.
  9. Investigate Any Suspicious Transactions.
  10. Gather Only the Essential Info From Customers.
  11. Check Your Website for Potential Vulnerabilities Regularly.
  12. Take Steps to Make Use of Fraud Prevention Software.

Online retailers are taking proactive measures to reduce the possibility of fraudulent activity. Consider these recommended practices to protect and identify instances of ecommerce fraud on your website.


  • Search for Signs of Online Fraud

Look for indications of potential online fraud as you manage your e-commerce store. Develop your ability to spot suspicious behavior on the website that could be an attempted scam, although only sometimes. The following are warning signs to watch out for and investigate if they happen in your store:

  • You always want to see large orders on your website, but demands much more prominent than usual could be suspicious. Additionally, if someone requested expedited shipping for a big purchase, it could indicate that the order is fraudulent, and you should take extra care in verifying it.
  • Scammers often begin making multiple small transactions to check if a stolen card is operational. These purchases tend to slip unnoticed before the fraudster advances to larger orders.
  • Look into any cases of multiple purchases made quickly from the same account or card, as this may suggest bot activity. Additionally, be wary of customers who make numerous orders over a short period (e.g., one to seven days) using different credit cards, as this could be an attempt to avoid detection by the same scammer.
  • Orders from an unfamiliar location: If you observe a sudden surge in orders from an area you’ve never sold to, it’s worth double-checking.
  • Different shipping and billing details: Scammers using stolen cards will often put a delivery address different from the cardholder’s billing address. This is something that should be investigated further.
  • Multiple unsuccessful payments: It is not unusual to have one or two declined payments during a purchase, but if there are several consecutive failed transactions, it could be an indication that someone is attempting to guess personal information or trying different cards
  • Be cautious when dealing with orders sent to a PO box address, especially if the order is large or multiple. Although this isn’t necessarily an indication of a scam, scammers often use PO boxes to remain anonymous. Consider disabling the option to ship to PO boxes altogether for added security.
  • Be mindful of questionable contact details, such as phone numbers, email addresses, and IP addresses. It could be a sign of fraudulent activity if you receive an order using a strange email address or from a location you wouldn’t usually get orders from. You can also use specialized software to help detect such cases; we’ll go into more detail about that later.

None of these occurrences can be considered definite signs of ecommerce fraud, yet it’s always worth investigating them whenever feasible.

IP addresses

  • Achieve Payment Card Industry Requirements

PCI compliance is a set of security guidelines developed by the Payment Card Industry Security Standards Council that all businesses must abide by to accept credit and debit card payments.

This is an essential requirement for any store or service that processes credit card information and should be taken seriously. It should be your top priority if you need to be made aware of PCI compliance.

PCI guidelines ensure that all credit card information stored is safeguarded and confidential throughout the transaction process. These regulations involve encrypting cardholder data over public networks, using anti-virus programs, and limiting access to this data to only those who are required to have it.

If you are using a reliable payment gateway, ecommerce platform, or payment solution such as Shopiroller Payments, likely, PCI compliance is already taken care of. Nonetheless, to ensure the security of card payments, it is recommended to confirm this.


  • Demand The CVV Number On All Orders

The card verification value (CVV), also known as the security code, is an alphanumeric sequence of three or four characters printed on a payment card. This code verifies that the cardholder has possession of their physical card and helps to protect against fraud when making online transactions.

Most online stores require customers to enter their CVV and their card number to complete a purchase, which further increases the security of your store.

This technique dramatically reduces the chances of someone being able to use stolen credit and debit cards on your website, as they typically only have access to the card numbers and not the CVV.


  • Include an Address Verification System

An Address Verification Service (AVS) is an anti-fraud tool that verifies whether the billing address entered by the customer matches the one on file with the credit card issuer. The purchase may be flagged or denied if the two addresses do not match. To ensure maximum protection for your business, check that all credit card issuers you accept use AVS. It’s a quick and easy way to detect fraudulent transactions.


  • Secure Your Website With SSL

Protect your website with SSL. Secure Sockets Layer (SSL) is a foundational security feature that any ecommerce site should have. The SSL protocol encrypts the link between an individual’s web browser and a website’s server. If unwanted individuals intercept any confidential data sent between these two computers, then SSL helps to prevent it from being read or taken advantage of.

Ensure that the URLs on your website begin with HTTPS instead of HTTP because the former implies that the page is SSL-encrypted. If your website isn’t SSL encrypted, then most web browsers will display a warning message to visitors telling them it’s not secure.

Obtaining SSL protection for your website is essential for successful business operations. Many ecommerce platforms offer SSL certificates as part of their plans, making it easier and more convenient to purchase this critical security measure. Without an SSL certificate, your website may be vulnerable to various threats that can harm its reputation and success.

Secure Your Website With SSL

  • Ensure Proof Of Delivery Is Provided

Another way to ensure a customer’s identity is by asking for proof of delivery on expensive orders. Typically, this involves the recipient signing upon receipt of the item and can dissuade those attempting to commit identity theft or chargeback fraud. This kind of protection may be beneficial if your company ships costly items. 

Additionally, you can request that the delivery company take a picture of the parcel as it is being delivered, which further assures that your business is not liable if someone claims they never received their package.


  • Set Up Secure Passwords For Customer Accounts

Account takeovers can happen when a fraudster correctly guesses a user’s login details. This isn’t done manually; scammers typically use bots to think of thousands of common passwords in no time.

 If you permit people to select their own passwords without any regulations, some will make them something easily predictable, such as “password” or “qwerty” or simply their username again. To prevent this, one of the most efficient and basic steps you can take is to demand solid passwords for all user accounts.


Password requirements may seem like a hassle to users, but they are necessary to protect your website from scammers.

 A strong password of at least ten characters that includes a number, an uppercase letter, and a symbol can take significant time for a hacker to brute-force guess – as outlined in the chart below. Nowadays, password managers make it easy to store complicated passwords, so even though there may be a few lost conversions due to the extra step, it is much better than risking your website’s security.

Set Up Secure Passwords For Customer Accounts

  • Restrict Purchase Amounts

You can limit the risk of fraud by setting an upper limit on the number of items a customer can purchase in one order. Review how many units of an item customers usually buy, and then set a slightly higher limit than that. Any orders which surpass this limit should be flagged or declined.


  • Investigate Any Suspicious Transactions

Monitoring software can be used to block suspicious transactions automatically. However, this carries the risk of turning away genuine customers. It is better to review orders that have been flagged manually.

Reach out to the customer who placed the order requesting additional verification, and if their response appears legitimate, you can approve the transaction. If not, then it’s likely to be fraudulent.


  • Gather Only The Essential Info From Customers

This point is simple to understand – protect the data you hold on customers by only collecting the essential information required for a transaction. 

Not having extra details, like birthdays, stored in your system should a scam be successful; there won’t be as much damage done. Names and addresses are essential; however, there is only a need to keep this.


  • Check Your Website For Potential Vulnerabilities Regularly

Security audits are an essential element of any ecommerce site’s security protocol and should be conducted regularly – for example, once or twice a year. Audits may be done internally by yourself or your team or delegated to a third-party security specialist. 

This process will help identify weak spots in your system before hackers can exploit them – such as outdated software, malicious code, expired SSL protection, or unsuccessful PCI compliance.


  • Take Steps To Make Use Of Fraud Prevention Software

Evaluating every purchase for its legitimacy can be a time-consuming and challenging process, especially if your business takes many orders per day. This is why anti-fraud software has been developed – to alert you of any suspicious buying activity that needs to be addressed. 

In the following section, we’ll explore some software solutions that can help you monitor your online store’s ecommerce activity.

Ecommerce Anti-Fraud Solutions

Ecommerce security software offers a range of solutions, all with the primary purpose of automatically detecting suspicious activity on your site. Depending on what kind of budget you have available, options can vary from basic shopping cart additions to complete protection platforms. 

The more expensive the tool is likely to have a better detection system, reducing false positives and increasing the accuracy of true positives. Here are some of our suggested e commerce security solutions:


The Riskified ecommerce protection platform is a widely used tool for preventing fraud. It utilizes Artificial Intelligence (AI) to quickly recognize potential fraudulent activity and comes up with an approval or denial verdict based on multiple factors. Additionally, the platform’s pricing model is beneficial, as it charges only when legitimate purchases are made – meaning the cost is proportional to the profit made, regardless of whether the business is large or small. Riskified sets the fee for each transaction.



What makes ClearSale stand out: This fraud protection service stands out from the competition due to its use of machine learning and a team of human experts to identify scams. 

It also boasts of having one of the industry’s highest approval rates and lowest false decline rates.

Pricing: Interested customers should contact sales



What we appreciate: Signifyd is a versatile choice for small and big companies. This adjustable platform provides a broad range of security services during the purchaser’s journey, such as fraud prevention, policy protection, chargeback recovery, and return abuse prevention. 

The service also has account security features to stop account takeover cases.

Costing: Please get in touch with sales.



Subuno provides a simple and cost-effective way to protect against fraud. With each order, Subuno examines multiple risk factors and then allows, denies, or reserves the transaction for your assessment. 

You can assess any suspicious transactions via their review dashboard with ease. They offer four different payment plans: Bronze ($19/month), Silver ($49/month), Gold ($99/month), and Platinum ($249/month).

Subuno protection

Fraudlabs Pro

What we like about Fraudlabs Pro is its advanced fraud-protection capabilities, which enable you to detect illegitimate transactions and generate reports to help you learn from scammers’ activity. 

It evaluates all transactions against over 40 factors, including email and credit card info, geolocation proxy server, and its comprehensive library of millions of blocked records. Moreover, Fraudlabs Pro offers a free plan which allows you to test the service before committing to one of its paid plans. The free version permits 500 queries per month and basic validation checks, making it great for new businesses. 

Pricing-wise, Fraudlabs Pro has five different plans starting from $29.95/month up to enterprise pricing, with the most popular plan being the Medium plan for $249.95/month.

Fraudlabs Pro

Prevent Ecommerce Fraud Before It Affects You

It’s best to be proactive and prepare for potential fraud. Learn the signs, watch out for suspicious activity, use our recommended safe practices, and consider investing in software that can help automate the process. 

Doing so could make all the difference in ensuring your business avoids becoming a victim of scammers.

Don’t let yourself be left vulnerable; take the steps necessary to protect your business and customers.

It may be a minor nuisance or detrimental to your business – why take the risk? Be prepared and stay vigilant.