Online payment fraud and scams are still among the biggest problems of businesses around the world. Many freelancers, small companies, large organizations and international corporations lose a lot of money each year because of these Internet payment scams. The points below can help you learn more about these fraudulent schemes, allowing you to spot and avoid these scams before you’re victimized by these criminal syndicates.
In the USA, $8 billion of losses were reported by online payment security groups in 2014 due to card not present scams. They estimate this to grow by over 125% in the next couple of years, which is around $19 billion of losses. Found below is how these online payment fraud and scams are conducted by criminal syndicates this year:
How Online Payment Fraud and Scams Are Committed This Year
Many of these online payment fraud and scams are usually done by criminal syndicates with stolen credit cards and hacked bank accounts. What they do is use these stolen financial accounts to buy products on the Web. After some time, legitimate card holders learn about these transactions. They file for disputes and chargebacks with their banks.
Merchants and product sellers lose money because of these stolen products. These businesses also shoulder fees for these chargebacks. They also risk losing their ability to accept payments due to high monthly chargeback volumes.
The criminal syndicates that operate these online payment fraud and scams usually have these products delivered to certain drop-off points. These are often anonymous P.O. boxes that they rent out. In some instances, these drop-off points are rented out by customers who buy these stolen products at much lower prices from these criminals.
Another widespread online payment scam is called friendly fraud. This is where customers intentionally file for chargebacks and disputes right after using the seller’s products. These are usually done with digital goods, such as software products, ebooks and digital multimedia content. Merchants lose a lot of money because of these online payment fraud and scams due to chargeback fees. As mentioned earlier, they also risk losing their merchant accounts, which means they can lose the ability to accept payments even from legitimate customers.
Many criminal syndicates get hold of these stolen financial accounts through a wide variety of scams. These include phishing tactics, fake tech support scams, boyfriend and girlfriend schemes, spyware, hacker attacks and so on. These tactics are also called online payment fraud and scams, which are targeted at Web shoppers instead of merchants and businesses.
How Merchants Can Avoid Online Payment Fraud This Year
Businesses with Web stores and online shopping platforms should also offer quick and easy cash payment options to their customers. This reduces the risk of being victimized by these online payment fraud and scams. Cash transactions are irreversible, which means chargebacks and disputes won’t be possible.
Businesses should also make use of online payment fraud prevention protocols. These are offered by merchant account providers, credit card companies and banks. These include AVS (address verification system) and 3D Secure technologies like Verified By Visa (VBV) and so on. These are designed to reduce these online payment scams.
If you keep these things in mind, then you can spot and avoid these Web crimes. You can also improve the bottom-line results of your business. Share this with your family, friends and colleagues, especially those who also operate Web stores and online shops. Doing this will allow you to help them spot and avoid these online payment fraud and scams before they succumb.