More and more people are shopping online every year and it is expected that online retail sales will exceed one trillion dollars in the United States by the end of 2022.

As the popularity of online banking grows, so does cybercrime and fraud.

In a 2021 survey of ecommerce merchants, it was found that the average online store received more than double the number of attempted fraud attacks per month than in 2020. This number increases exponentially the larger the business is.

It’s not important how many customers you have— eventuially, fraudsters will target your site. As the store owner, you’re not just responsible for protecting your business, but also for protecting your customers from scams.

The following text provides tips on how to protect your online store from fraud, as well as the benefits you can reap from doing so.

Fraud that occurs during an ecommerce transaction is known as payment fraud. This type of fraud can take many different forms, from using stolen credit card information to placing orders with the intention of never paying for them.

Ecommerce fraud is a broad term that covers any type of fraudulent activity that takes place online. This can include anything from stealing credit card information to identity theft. There are many different types of ecommerce fraud, but all aim to turn a profit at the expense of the merchant.

1. Look for Warning Signs of Ecommerce Fraud

Here are some red flags to look out for and look into if they occur on your site:

  • Very large orders: Of course, you love to see large purchases. However, if a purchase is significantly larger than most others made on your site, it may be fraudulent. Also, check if the order was made with expedited shipping, as scammers want the large orders sent as soon as possible to avoid detection.
  • Multiple very small orders: To test that a stolen card works, scammers start by making multiple, very small purchases. These are more likely to go undetected before the scammer moves to larger orders.
  • Many back-to-back purchases: Look into any instances of multiple purchases over a short period of time from the same account or card, more than you would reasonably expect from a real customer. This could indicate bot activity.
  • Multiple orders from different cards: It’s unusual for a customer to make several purchases over a short period of time (e.g., a day to a week) with different credit cards. Flag this activity as suspicious, as the same scammer may use different cards to avoid detection.
  • Orders from unusual locations: This isn’t always a sure sign of a scam, but a shipping address in a city or country you’ve never shipped to before is worth looking into, especially if you see a sudden uptick in orders from that place.
  • Different shipping and billing address: If the scammer is using a stolen card, that card owner obviously isn’t having the items sent to them. That’s why scammers will put a shipping address that’s different from the card’s billing address.
  • Multiple failed transactions: While one or two failed transactions on a purchase is nothing out of the ordinary, multiple declined transactions in a row is a sign of a scammer trying to guess information, or trying different cards.
  • PO box used as a shipping address: Again, this isn’t a sure sign of a scam — businesses often use PO boxes for shipping, for example. But, be wary of very large orders or multiple orders to a PO box with an unconfirmed owner, since scammers also use them to preserve anonymity. Consider removing the option to ship to PO boxes altogether.

2. Achieve PCI Compliance

The Payment Card Industry Security Standards Council has developed a set of security standards businesses must follow to accept credit and debit card payments, PCI compliance.

If you process credit card data, you must be PCI compliant. If you’re not familiar with PCI compliance, you should make it your top priority.

The Payment Card Industry (PCI) has created a set of guidelines to help ensure that all card data that is stored is protected and that sensitive information remains secure during the transaction process.

Some things you can do to protect cardholder data include encrypting it across open networks, using antivirus software, and only allowing necessary personnel to access it.

3. Require CVV on All Purchases

The three- or four-digit number printed on a payment card is called the card verification value (CVV), or security code. It verifies that customers have the physical card in their possession.

Your own online store should require the cardholder’s CVV in addition to the card number for most online transactions.

Since scammers generally only have access to a credit or debit card’s number and not the CVV, using this system greatly reduces the chances of them being able to successfully use stolen cards on your website.

4. Use an AVS

An Address Verification Service (AVS) helps prevent fraud by checking whether the billing address given by the customer matches the one on file with the credit card issuer. If the addresses don’t match, the transaction is flagged or declined.

Be sure to only accept credit cards from issuers that use an AVS. This is an easy way to catch fraudulent transactions and protect your business.

5. Encrypt Your Website with SSL

Secure Sockets Layer is a security protocol that encrypts the connection between a web browser and a website’s server.

The URLs on most websites tend to start with HTTPS instead of HTTP. This means that the page is SSL-encrypted. If your site is not SSL encrypted, then most browsers will give out a warning to visitors letting them know that your site is not secure.

You can get SSL protection for your site by purchasing an SSL certificate. Some ecommerce platforms include an SSL certificate in their plans, which is always a plus.

6. Require Proof of Delivery

Another way to check that customers are who they say they are is to get proof of delivery for big purchases. This usually means that the person getting the delivery has to sign it, which will probably stop scammers who use identity theft or chargeback schemes.

This protection can be very beneficial for your company if you ship expensive items.

If you’re worried about a package being lost or stolen, you can ask the delivery company to take a photo of it when it arrives. That way, if the person who it was supposed to be delivered to says it never arrived, you have proof that it did.

7. Require Strong Passwords for User Accounts

If a scammer manages to guess a user’s login credentials, they can take over that person’s account. This isn’t something that they do by hand, but rather by using bots that can quickly guess many common passwords.

If you give visitors the freedom to choose their own passwords, many of them will likely pick something easy to guess, like “password,” “qwerty,” or just their username.

If you don’t require strong passwords for customer accounts, it’s only a matter of time until someone hacks into the system. It’s one of the best ways to protect your system.

8. Limit Order Numbers

If someone is trying to buy a lot of items from your website using stolen information, you can limit the amount of damage they can do by limiting the number of items they can buy in one go.

The company should look at how many units of an item the average customer buys, set a limit slightly higher than that, and decline or flag orders that come in above that limit.

9. Conduct Manual Checks on Suspicious Purchases

You may be able to use monitoring software to automatically deny transactions that seem suspicious, but you could also end up rejecting orders from actual customers.

It would be beneficial to spend the time and resources to manually check orders that have been flagged as potentially fraudulent.

Reach out to the customer who placed the order and ask them to confirm the details. If their response seems legit, then you can approve the order. If not, it’s probably a scam.

10. Only Collect Customer Data that you Need

This means that you should only collect the customer information that you need in order to complete a transaction. This way, if a scam does happen, it will not do as much damage.

11. Regularly Audit Your Website for Vulnerabilities

You or your team can conduct audits internally, or you can hire a security company to do it externally.

Security audits are important in order to uncover any holes in your defenses that scammers could potentially exploit, such as outdated software, lack of malware protection, expired SSL protection, or failed PCI compliance.

12. Consider Fraud Protection Software

If you are receiving a lot of orders every day, it can be impractical or impossible to check the legitimacy of each one.

Anti-fraud software is designed to detect suspicious purchase activity and notify the user.

Benefits of Ecommerce fraud protection

Increase Your Profits

E-commerce stores lose a large sum of money every year due to chargeback frauds. The fraud can occur in two situations: 

  1. The customer attempts to receive the products for free by requesting for a fake chargeback.
  2. The credit card is used by someone else other than the owner so the card owner requests for a chargeback. 

If many frauds take place at your e-commerce store, there will also be a lot of credit card chargebacks. Chargeback frauds not only reduce your revenue, but also increase your costs if you have to pay for shipping fees as well.

The solution to preventing fraudsters from targeting your e-commerce store is to have a fraud protection system in place. This will help increase your profits by preventing them from being able to steal your money.

Grow Without Fear 

As someone who is running or has started their own business, you are always looking for ways to increase your online presence and create more revenue streams. As your e-commerce store grows and your products become more popular, you also become a target for scammers and hackers.

intent As you increase your advertising, you will not only attract customers, but also people with malicious intent.

The reason scammers target large e-commerce stores is because they are more likely to be successful in their attempts. Smaller stores are less likely to be targeted because the scammers are less likely to be successful.

However, do not let the fear of scammers stop you from growing. In fact, your growth is also linked to an increase in revenue, which means you can invest more in technology.

More Up-to-Date With Technology

E-commerce stores will need to become more technologically advanced if they want to reduce fraudulent activity. This means staying current with machine learning technologies used for predictive analytics.

Forecasting the amount of possible fraud that could happen at an e-commerce shop over time lets the company plan better.

By using scoring algorithms and velocity rules, businesses can identify the IP addresses or devices where fraud is most likely to occur.

Address profiling allows ecommerce stores to verify that the entered address is valid and calculate a risk score. As a result, businesses can be more alert to people shopping from specific locations.

You can use behavior analytics to track every stage of a customer’s journey, from signing up to checking out of your store. For example, you can use card details to see if the same card is being used by multiple customers. This can help you prevent CNP fraud. You can also use behavior analytics to prevent chargeback fraud.

To achieve long-term success online, it is important to stay up-to-date with the latest technology.

If an e-commerce store uses technology in its business functions, it will be more efficient. Having a fraud protection system protects the business from outdated software and allows it to grow.

Smooth User Experience

How important user experience is cannot be stressed enough in customer retention according to a study. Around 39 percent of the people avoided vendors after they had a negative experience with them.

The website had some features that were unpleasant for users.

If a customer is defrauded while shopping at your store, they will likely develop a negative opinion of your store which will be difficult to change. Positive reviews from their peers or online may help to change their opinion.

people at social gatherings tend to focus more on their negative experiences than their positive ones.

If you want to keep your valuable customers, it’s a good idea to invest in a fraud protection system.

Create Your Own Industry Rules

As data has become increasingly valuable for online businesses, many e-commerce stores have began collecting and analyzing data to see which products are the best selling and which are not as popular.

By doing this, they are able to make decisions on what to keep in stock and what needs to be replaced. This helps to keep their business running smoothly and efficiently.

Data can be used to understand customer demographics, which is valuable information for marketing professionals who have to prepare a strategy for your store.

In addition to the above, data is also extremely valuable in predicting and preventing instances of fraud.

If you have data and install a fraud protection system, you can make your ecommerce store more secure by creating custom rules to identify risks.

If you tailor your rules to fit your industry, you will be able to respond more quickly to fraud attempts that occur in your area, and be more aware of them.


A fraud protection system can be beneficial in many ways including avoiding chargebacks, deterring criminals, and protecting customers’ information. Some fraud protection systems have the ability to flag suspicious orders and transactions automatically, simplifying the process of catching potential fraudsters.

Customer satisfaction is key to maintaining a good brand name. One bad review can hurt the brand, so it’s important to have several good reviews to offset it. E-commerce fraud protection is essential to preventing negative customer experiences.

As your e-commerce store becomes more successful and makes more sales, you may become a target for hackers and phishing scams.

About the Author Brian Richards

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