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You might think your ecommerce website is too small to be of much interest to online criminals. Sadly, you’d be wrong.
In 2018, small businesses in the U.S. reported losing an average of $28,313.33 to online fraud.1 And the Federal Trade Commission reported that, from 2017 to 2018, credit card fraud increased by 24% and online shopping and payment account fraud increased by 18%.2
An attack like that can be very damaging. At the very least, if you accept a fraudulent payment, you could be held financially responsible for the loss. But there are steps you can take to help minimise your risk, and we’ve outlined them below.
Before we talk about what you can do to minimise your risk, it's helpful to understand common tactics fraudsters use. Online fraudsters usually use two methods to steal money:
Hackers often sell credit card numbers to other fraudsters who open accounts with online retailers and use the stolen numbers to pay for purchases. This type of fraud is difficult to detect because many people don't check their credit card statements thoroughly and because victims typically have no idea someone opened an online account in their names.
Although the potential for fraud is high in online transactions, it doesn’t mean you have to accept it as part of doing business online. By putting the right tools and processes in place, you can help keep your business and your customers secure — and reduce your chances of chargeback fees and lost revenue. Below are six tips to help you get started and once you’ve checked these off, make sure to review the 12 signs of potential fraud every business should be aware of.
Nobody knows your business as well as you do. You know your biggest spenders and their buying patterns. Monitor your accounts and transactions looking for any red flags, such as inconsistent billing and shipping information, as well as the physical location of your customers — there are tools that trace customers' IP addresses and alert you to those from countries known as a base for fraudsters.
Also, check to see if your customers are using free or anonymous email addresses (such as Gmail or Yahoo email addresses), as there's a much higher incidence of fraud coming from free email service providers than from paid.
Using your unique knowledge of your business, set limits for the number of purchases and total value you'll accept from one account in a single day. It can help keep your exposure to a minimum should fraud occur.
AVS compares the numeric parts of the billing address stored within a credit card to the address on file at the credit card company. This is a fraud tool included in most payment processing solutions, but check with your payment processor to be sure it’s supported.
You’re familiar with this three-digit or four digit security code printed on credit cards. What you might not know is that PCI rules do not allow you to you store the CVV along with the credit card number and card owner’s name. (That’s why it’s so effective — it’s virtually impossible for fraudsters to get it unless they’ve stolen the physical credit card.) Most processors include a tool to require CVV as part of their checkout templates. Use it.
Fraudsters employ sophisticated programs that can run through all the permutations of a password. It won’t take them long to crack a four digit, alpha-numeric password (such as, “abcd”). Best practices these days call for (at least) an eight-digit alpha-numeric password that requires at least one capitalization and one special character (for example, “P0r$che9!!”). Your customers might grumble, but it’s better safe than hacked.
Make sure you’re running the latest version of your operating system (OS), as OS providers continually update their software with security patches to protect you from newly discovered vulnerabilities, as well as the latest viruses and malware.
Likewise, install and regularly update business-grade anti-malware and anti-spyware software (free, limited-feature, and consumer-strength anti-virus software are not sufficient) to prevent attacks that exploit outdated software vulnerabilities.
Note: If your site is hosted on a managed solution, such as BigCommerce, automatic security patches help ensure that any vulnerabilities are quickly resolved.
Once you’ve taken these steps, learn the 12 signs of potential fraud every business should be aware of.
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