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E-Commerce Fraud Schemes & Scams Security Protection Guide

The e-commerce business thrives in the digital age, however one of the primary incidents are associated with various hacker-initiated scams and fraud schemes. Our complete guide will show you some of the basic types that have caused the most damaging effects, as well as tips to protect both consumers and businesses.

E-Commerce Is A Main Target For Hackers

As the online business has flourished in the digital so have consumers turned their attention to the convenience of purchasing goods and services from e-commerce establishments – auctions, e-shops, outlets and other sales options. As usual where there is a huge amount of financial transactions there is a growing interests for criminals to strike. The majority of today’s security protocols, services and solutions have been made initially with the goal of protecting sensitive information trading and other actions such as financial transactions which are being used by the e-commerce industry.

There are several important differences that are dominated by the act that in virtually all of the cases the two main involved parties (buyer and seller) cannot see each other and the identity confirmation is done by a third-party (a payment gateway site). This characteristic makes it really hard to adopt a universal solution that can safeguard against the fraud schemes and scams that plague online businesses and even ordinary users with billions of dollars in losses every year. In this guide we would like to present some of the typical examples as well as to offer measures that can prevent either party from becoming a victim.

  1. Payment Card Fraud

This is the most most common type of fraud techniques issued by the hackers. As this is one of the most prevalent types of financial crimes it also generates one of the biggest losses among all of the scam schemes worldwide every year. In virtually all of these cases the hackers use stolen payment card details. There are several types of methods for having the necessary data – physical cloning of cards, theft or database leaks or the trading of such data from the underground black markets.

When the fraudulent transaction is complete and the payment has passed through the relevant gateway the business is responsible for the delivery of the paid goods or services. Effectively the card owners may seek reimbursement from the financial institution which has issued their card if they spot the fraud within a certain limit. When a computer security incident is involved such as a hacker attack, virus infection or something else, the best to protect the targets is by the use of a quality security solution.

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  1. Refund Fraud

These cases are related to the previous one where the criminals use stolen payment card details to make an overpayment. Some of the typical schemes associated with this is the purchase or goods and services from partner or hacker-controlled sites to generate revenue that is shared with the attackers.

  1. Merchant Fraud

Hackers sell and receive payments for non-existent items such as consumer goods, services, auctions and etc. These types of scams use counterfeit company registration information and bank accounts which can be quickly closed down and all received payments withdrawn in cash before the affected victims can spot the incident.

  1. Payment Card Testing Scheme

This was a popular technique a few years ago when hackers used various generators that created and tested payment (usually credit) card numbers to test them on various hacker-controlled e-shops. The computer criminals responsible for the attacks took the time to analyze the different response gates that are presented by the payment gateways. For instance if they have been able to guess (craft) the right digits of a debit card, a likely error would be the input of a wrong security code (CVV) or expiration date. Some of the sites that process them give out detailed information about the exact reason why the card has been rejected. The hackers can use these responses to guess what part of the information they need to get right and proceed until it is accepted.

  1. Identity Theft

The hackers make online purchases using counterfeit identities. This is a combination of a few different types of schemes that utilize both harvested or generated payment card details, a convincing false identity and the normal-looking behavior patterns associated with the average buyer of the online store in question.

  1. Phishing Campaigns
    A major concern for all Internet users are the email phishing campaigns. In many cases they can be a source of malware such as viruses, ransomware and Trojans. Some of the more advanced threats can harvest the users stored payment details, browsing history and other related data. There is a specific type of viruses called banking Trojans which can impersonate legitimate institutions in a very convincing way which can lead to banking details theft.Most of the phishing tactics utilize email messages as the preferred form of communication. The hackers claim that the sent message comes from a legitimate company or institution and send attach various hyperlinks that may lead to hacker-controlled download sites. Other popular tactics include the attachment of infected documents or binary files which upon interaction can trigger the dangerous virus infection.
  2. Friendly Fraud

This is another name for the popularly known Charbe back fraud scheme. This is used when a malicious user makes a purchase from an online vendor and then claims that their card has been stolen. The user asks the relevant party for a charge back after they have received the purchased goods or services.

Active E-Commerce Scam and Fraud Protection

To a large degree almost all of the popular fraud scenarios can be effectively prevented if the users use adequate security solutions and are instructed about the basic security principles. It is true that the majority of the scams are due to social engineering and phishing tricks, black market trades and hacker attacks. There are several important factors that are important to scam and fraud prevention listed below.

  • The Use Of Specialized Security SolutionsThe majority of the phishing attacks carry dangerous malware which are used to extract and steal bank accounts and payment card details. A quality anti-malware solution can protect against such intrusion attempts and can effectively remove active infections with only a few mouse clicks. Enterprise clients can use advanced options like intrusion detection systems, firewalls and other network and software-based means to protect their secure sites against hacking.
  • User EducationUsers are very likely to click a link or download an attachment from a phishing link if they cannot tell the difference between a counterfeit and a real message. The hackers use these strategies as they are always effective, especially when bulk emails are being sent from hacked web servers and accounts which may look legitimate. Computer users can spot some of the warning signs by looking out for any grammar mistakes, wrong logo placement or the use of free email hosting services.
  • Secure Technology

The use of secure technologies such as payment sites that enforce encryption and are verified by recognized authorities is a must when dealing with financial data. The use of old user applications is a condition for the proliferation of several dangerous attack scenarios. We have reported numerous times that popular applications, plugins and even the operating system itself can be exploited by hackers which can either allow them to intrude into the affected machine or place a dangerous banking Trojan.

Some popular tips that can prevent payment card fraud include the following:

  • All user accounts should use complex passwords. Read our extensive tutorial by clicking here.
  • Business owners should continuously check the accuracy (to the best of their ability) of all stored accounts on their system. Specialists can utilize behavior monitoring techniques to detect any early signs of possible abuse.
  • Personal and financial information should be provided only to sites and gateways that use a strong encryption cipher and are verified by a legitimate certificate authority.
  • Computer users should never trust e-mails, sites, popups and other types of content that ask them for their personal or payment information. Hacker operated malicious ad networks and browser hijackers (which can be removed by a quality anti-malware solution) can lead to a fraud scenario.
  • Untrusted or questionable sites should be avoided.

As always we recommend that users utilize a quality anti-malware solution which can protect their systems against abuse, viruses and all types of malware (including browser hijackers) that can lead to financial abuse.

SpyHunter anti-malware tool will diagnose all current threats on the computer. By purchasing the full version, you will be able to remove all malware threats instantly. Additional information about SpyHunter / Help to uninstall SpyHunter

Martin Beltov

Martin graduated with a degree in Publishing from Sofia University. As a cyber security enthusiast he enjoys writing about the latest threats and mechanisms of intrusion.