According to research done by the Center for Strategy and International Studies (CSIS) and McAfee, internet fraud accounts for 0.8% of global GDP. Most importantly, a significant portion of this amount represents payment fraud.
Online payment fraud implies an illicit transaction by deceitfully obtaining the customer's login information. For instance, it manifests as phishing, friendly fraud, data theft, credit/debit card fraud, etc. Interestingly, the deception has also advanced with the development of technology. Additionally, con artists have developed sophisticated methods to produce complicated frauds that are exceedingly challenging to uncover.
| Several tried-and-true methods for preventing online fraud
Learn how to avoid online payment fraud with these simple methods. In this blog post, I'll walk you through a few simple yet effective techniques to thwart online payment fraud. It's always better to prevent something than to try to fix it.
| 1. Data-Theft Scams
The most prevalent form of online payment fraud is the theft of consumers' digital information, including PINs, credit/debit card numbers, and banking account information. Then, using the data that was obtained, the account of the credential holder was compromised. Additionally, employees' carelessness in handling an organization's data contributes to data theft.
Data theft, namely the widespread theft of customer records from companies and other organizations, is a specific subcategory of identity theft. The unknowing clients whose data was stolen are then victimized by identity fraud using these stolen details.
Due to the fact that stolen company data accounts for a sizable percentage of the current identity theft issue, The scale, which can impact hundreds of thousands or even millions of people when a corporate database is lost, distinguishes it from ordinary identity theft.
| Techniques to avoid data theft
💡Checking the computer system for viruses on a regular basis.
💡Employing pin-chip debit/credit cards.
💡Every one to two months, change your password.
💡Updating software on systems on a regular basis
💡Making sure the wifi connection is safe and secure.
💡Inappropriate and spam emails should not be responded to.
| 2.Phishing Scams
Hackers contact the intended victims while disguising themselves as financial institutions through phishing. Email, phone, text, and other commonly used channels are some of these modes. For instance, phony email links, attachments, and emails from unknown senders are all used to lure potential targets. Furthermore, research indicates that 90% of all data breaches are caused by phishing.
| Techniques for preventing phishing scams:
💡Using email filters
💡Altering the browser's settings Passwords for payment sites shouldn't be saved automatically.
💡Banks should be promptly notified of fraud to ensure prompt action and monitoring.
💡Jot down the URLs of any links in emails. It is an effective channel for shady websites that steal user data.
| 3. Friendly Fraud
The phrase "friendly fraud" is a contradiction. Fraud is never welcome, especially when your consumer is the perpetrator.
Friendly fraud, often referred to as "first-party fraud" or "chargeback fraud," occurs when an actual customer contacts their card issuer to request a chargeback for a purchase they say they did not make or do not recognize. They then keep the products or use the services they have acquired without having to pay for them.
According to a 2018 survey by Javelin Research, friendly fraud accounts for almost one-third of all contested payments. Given that chargebacks cost the industry $30 billion annually, this is not a little issue.
For retailers selling online or through mobile channels, friendly fraud is worse. Compared to 35% for businesses with physical stores, 41% of their chargebacks are related to friendly fraud. Vendors of digital products within apps have much greater challenges. They believe that benign fraud accounts for about half of the chargebacks they receive.
However, estimating friendly fraud involves spotting a transaction that is larger than usual on average. Additionally, a high order frequency and a high number of orders that were stolen point to the possibility of friendly fraud.
| Amiable fraud prevention methods:
💡To confirm the accuracy of the order, record the phone call.
💡By approving the signature verification, saving the goods delivery details.
💡Blacklisting of suspects and dishonest clients.
💡Fostering positive customer relationships to retain a positive brand image.
💡Communication with other online payment peers to get up-to-date details about phoney customers
| 4.Triangulation Fraud
A particularly nefarious form of online fraud known as "triangulation fraud" uses a real online store to make a fictitious "triangle sale in which the fraudster arranges for a legitimate customer to receive a product they have purchased with a stolen credit card.
There are three actors who make up the triangle:
🐍 one con artist
🤝 one honest client
🏪 one large enough storefront that is heavily automated
A fraudster appears as a vendor, provides a fantastic price on a product, receives payment from a real client, and then uses a credit card that has been stolen to place the consumer's order with an authorized online retailer.
The merchandise is delivered to the customer, but the genuine cardholder and the merchant lose out. Then, the business loses again when the real cardholder is fairly granted a chargeback for the purchase.
In the past, the term "triangulation scam" referred to a chance that was more like to an arbitrage: buying low here and selling high there. The stakes are higher today than ever before because thieves may purchase stolen credit card credentials in large quantities and at a low cost, necessitating the need for credit card fraud detection.
In a CNP (card not present) ecosystem, contemporary triangulation fraud occurs when there are three people involved:
a scammer using a legitimate e-commerce storefront, a trustworthy eBay or Amazon seller, or a customer taking advantage of an unreasonably low price on a new item (or, sometimes, just a good price) at a semi-luxury retailer, typically one with a sizeable enough customer base to have a fully automated checkout and delivery infrastructure.
These schemes' results can be seen as follows:
The money belonging to the genuine buyer is taken by the fraudster.
The credit card that was stolen is used.
In addition to having to return the money to the customer whose account was actually charged, the business loses the merchandise.
| Preventative measures for triangulation fraud
Without specific security technologies in place, triangulation fraud might be challenging to detect. Each participant involved in a triangulation technique may initially seem trustworthy in the setting of the hoax. Real customers, real credit cards, and real orders for real goods will all be there.
As with any type of digital fraud, having as much information as you can about your consumer is crucial, but maintaining strong security with little hassle and false positives is a tricky balance.
We should take into account information like the following when trying to prevent triangulation fraud:
💡The Account's History: Are there any accounts that seem unusually new and unrated by customers?
💡Physically Incompatible Addresses: Do the shipping and billing addresses have any connections or not?
💡False Contact Information: Do the parties return phone calls or other attempts at communication?
💡Relations Between Behaviors. Do numerous accounts all have the same names or use the same passwords?
Businesses will first be able to learn more about fraudsters using the following methods after deploying an effective fraud prevention solution:
💡Data enrichment: Giving companies the ability to verify the accuracy of email addresses, such as by determining how recently the email account and any linked business accounts were formed.
💡Reverse social media lookup: While a fraudster may have access to a variety of credit card credentials, they are unlikely to be able to fully flesh out their stolen identities into realistic shoppers, complete with the social media and online platform profiles typically associated with any reliable online presence.
💡Device fingerprinting: By analysing how visitors connect to a company's website, taking into account elements like the use of a VPN or a peculiar hardware configuration, businesses can spot common fraudster tendencies and take protective measures.
💡Checks on velocity and behaviour: By spotting multi-accounting, we can catch those offenders who are simultaneously operating numerous of these fraud schemes.
Businesses should be able to detect and prevent fraudsters trying to use triangulation fraud if they have a security suite with the right tools.
After that, with only a minimal amount of additional friction, a dedicated fraud team can analyse the data enrichment analysis to decide whether a customer is valid and manually sign off on them, depending on the results.
Additionally, it can assist in enabling fraud prevention machine learning algorithms that can streamline the approval process and offer new, bespoke risk criteria depending on the requirements of certain firms.
| 5. Refund Fraud
Refund fraud happens when customers frequently return things that aren't qualified for a refund without a valid cause. For instance, stolen or damaged products are often sent back. E-commerce firms frequently raise their pricing as a result of the loss brought on by fraudulent returns.
| Techniques for preventing refund fraud
💡Customers that return frequently are a red flag.
💡Stricter return regulations, such as prohibiting returns without an official receipt.
💡Products have serial numbers for verification.
💡Payment scams are generally an unavoidable aspect of transactions in the digital age.
However, using the aforementioned strategies will help you significantly cut down on it, if not completely eradicate it. Additionally, be ready for any unanticipated circumstances when making online payments. To protect your business and purchases, stay in touch with the relevant financial and regulatory authorities at all times.
Scam Reporting Website:
Internet fraud should be reported as soon as it is noticed, or as soon as you become aware that you may have already been a victim.
Listed below are organisations and websites for reporting online fraud complaint:
🇦🇪UNITED ARAB EMIRATES-https://www.dubaipolice.gov.ae/wps/portal/home/services/individualservicescontent/cybercrim
🇬🇧UNITED KINGDOM- www.actionfraud.police.uk
🇪🇸SPAIN- Policia Nacional or Guardia Civil
🇦🇺AUSTRALIA-https://www.cyber.gov.au
🇶🇦QATAR-https://www.qcert.org
General FAQs
| Q.What is online fraud?
A. Online fraud is a sinister and deceptive act that preys on innocent people who trust the virtual world. It's a cowardly crime that uses technology as a weapon to manipulate and deceive individuals, leaving them vulnerable and victimized.
At its core, online fraud is a betrayal of trust. It tricks people into handing over their personal and financial information, exploiting their goodwill and leaving them with a sense of violated trust. It preys on our desire for convenience, our willingness to believe in the good intentions of others, and our naivety in the face of technology.
But despite the dark nature of online fraud, it's important to remember that we have the power to protect ourselves. We can educate ourselves about the warning signs of scams and be vigilant about the security of our personal information. We can stay informed about the latest security threats and take proactive measures to safeguard our digital lives.
In the face of online fraud, we can choose to be resilient, resourceful, and proactive. We can refuse to be victims and instead take ownership of our digital lives. We can come together as a community to support and protect one another, building a safer and more secure online world for all.
So let us not be discouraged by the scourge of online fraud. Instead, let us be inspired to take action, to be informed and empowered, and to stand up for what is right. Together, we can create a brighter, more secure future for ourselves and for generations to come.
| Q.Where to report online frauds in India?
A. In India, you can report online frauds to the following authorities:
1.Cyber Crime Cell of your local police station: You can file a complaint at the nearest police station with a cybercrime cell. They will investigate the matter and take necessary action.
2.National Cyber Crime Reporting Portal
(https://www.cybercrime.gov.in/): This portal has been launched by the Ministry of Home Affairs, Government of India, to report cybercrimes. You can file a complaint online and track the progress of your complaint.
3.Reserve Bank of India (RBI) Helpline: If you have been a victim of an online banking fraud, you can contact RBI's 24x7 helpline at 1800 22 4060.
4.Indian Computer Emergency Response Team (CERT-In): You can also report the incident to CERT-In, which is the nodal agency for cybersecurity in India. They will assist you in mitigating the impact of the cyberattack and take necessary action.
5.Consumer Complaints: If you have been defrauded in an online transaction, you can file a complaint with the Consumer Complaints forum (https://consumerhelpline.gov.in/).
It is recommended to report the fraud as soon as possible to the relevant authorities to prevent further losses and to increase the chances of catching the perpetrator.
| Q.How do online frauds work?
A. Online frauds work in various ways, but they typically involve deceiving someone into giving away their personal or financial information or making a payment. Here are some common types of online frauds:
1.Phishing scams: This involves sending emails, text messages or social media messages that appear to be from a legitimate company or organization, asking the recipient to provide personal or financial information, such as passwords or credit card details. The information is then used for fraudulent purposes.
2.Fake websites: Scammers may create fake websites that look similar to legitimate ones, and then trick users into entering their personal or financial information. These fake websites may be advertised through emails, social media or online ads.
3.Online shopping scams: This involves setting up fake online stores that offer products at very low prices. Once a victim makes a payment, the scammers disappear without delivering the product.
4.Investment scams: Scammers may lure victims into investing in fake schemes that promise high returns. Once the money is invested, the scammers disappear with the money.
5.Tech support scams: This involves scammers posing as tech support representatives who claim to have detected a problem with the victim's computer or device. They then offer to fix the problem for a fee or by gaining remote access to the victim's computer, but in reality, they install malware or steal personal information.
To protect yourself from online frauds, it is important to be cautious while sharing personal or financial information online and to verify the authenticity of websites and offers before making any payments.
| Q. How to recover money from online fraud?
A. Recovering money from online frauds can be a challenging process, but there are some steps you can take to increase your chances of recovering your funds:
1.Contact your bank or payment provider: If you made a payment through a bank or payment provider, contact them immediately and report the fraud. They may be able to reverse the transaction or freeze the account of the fraudster.
2.File a complaint with the relevant authorities: Report the fraud to the relevant authorities such as the Cyber Crime Cell of your local police station, National Cyber Crime Reporting Portal, Reserve Bank of India (RBI) Helpline, Indian Computer Emergency Response Team (CERT-In), and Consumer Complaints forum. Provide all the necessary information and evidence to support your claim.
3.Gather evidence: Gather all the relevant information related to the fraud such as emails, messages, payment receipts, and any other communication you had with the fraudster. This will help in building a strong case and increase your chances of recovering your funds.
4.Seek legal advice: Consider seeking legal advice from a lawyer who specializes in cybercrime and fraud cases. They may be able to guide you on the legal options available to you and help you recover your funds.
5.Be cautious of recovery scams: Be aware of recovery scams where fraudsters may pose as recovery agents and offer to recover your lost funds for a fee. These are often scams themselves and can lead to further losses.
It is important to act quickly and report the fraud as soon as possible to increase your chances of recovering your funds.
I sincerely hope it will pique your interest and leave you wanting more! 👇