Many people are shopping online more than ever before but are concerned about the security the organization provides them with. This has encouraged organizations to incorporate new fraud prevention solutions to protect customers as much as possible.
The cost of online attacks is expected to hit $8 trillion this year. The worst part is that it keeps growing, and fraudulent activities like account takeovers, ID theft, and chargeback fraud are taking over the world.
Let’s dive deep to learn how to protect your online business and customers from fraud.
8 Ways to protect your online business and customers from fraud
How to protect your online business and customers from fraud
1. Prevent loyalty fraud
Loyalty fraud, or reward or points fraud, is when online attackers and customers exploit loyalty programs for their gain. Loyalty fraud from customers might either be intentional or unintentional. However, if it’s from fraudsters, it’s usually done from their technical skills and tools to access existing customer accounts and drain them from loyalty rewards.
Loyalty fraud usually happens when fraudsters take over someone’s account and steal the customer’s loyalty points.
Continuous terms and conditions updates are an excellent way to prevent loyalty fraud. This way, you are ensuring that the exploits are covered. However, keep in mind to do the following as well:
- Secure the login stage
- Educate your customers about their accounts value and loyalty points
- Closely monitor customer behaviors
2. Incorporate fraud policies
Including a fraud prevention and detection policy that allows your organization to deal with fraud is always a great idea. A fraud policy should include the following:
- Defining fraudulent actions
- Responsibilities of fraud management
- A statement that confirms all appropriate measures will be taken against fraud
- All suspected fraud will be reported and investigated by the responsible authorities
- Encouraging employees to report any suspected fraudulent activities
Identifying fraud alone can be challenging, so setting up the right policies will significantly help you take the proper measures. More eyes are better than two, so everything you state in your policy will allow others to help you create more fraud prevention solutions.
3. Use eSignature technology
Deploying a secure and compliant eSignature solution is an excellent way to prevent fraud. After all, you don’t always need to be “on the ground” to sign documents with a wet signature. eSignatures are typically used through a platform, using cryptographic seals that don’t allow signers to alter the information within the document after it’s signed.
Another eSignature security feature that prevents fraud is an Audit Trail that provides a detailed record of all activities and events during the signing process, ensuring transparency and accountability. By capturing information such as timestamps, IP addresses, and user identities, it serves as a robust deterrent against fraud, enabling businesses to detect and prevent any unauthorized or malicious activities.
This is a great strategy for online fraud prevention and for stopping many types of fraud. The seal tracks various interactions, such as modifications, transfers, signatures, and more.
4. Use online fraud prevention tools
No matter how fast your business grows and how well payments are flowing, customers are always at risk from fraud. Organizations are starting to get highly concerned about online fraud prevention because continuous threats are thrown at their organization each year. Here are some of the popular online fraud prevention tools in 2023:
- Riskified is a fraud prevention platform that uses machine learning algorithms to analyze customer behavior and detect fraudulent activities in real time. It helps businesses prevent chargebacks and reduce false positives.
- Forter is an advanced fraud prevention solution that leverages machine learning and behavioral analytics to identify and block fraudulent transactions. It provides real-time decisions and fraud prevention across various industries.
- Kount offers an AI-driven fraud prevention platform that helps businesses detect and prevent fraud in online transactions. It combines device fingerprinting, machine learning, and anomaly detection to identify fraudulent activities.
- Sift Science is a fraud detection and prevention platform that uses machine learning to analyze user behavior and transaction data. It helps businesses identify and block fraudulent activities across multiple channels.
- Signifyd is a fraud protection solution that uses machine learning and data analytics to assess the risk associated with online transactions. It provides real-time decisions to prevent fraud and streamline the order fulfillment process.
Please note that the popularity of specific fraud prevention tools may change over time, and it’s advisable to research and evaluate the most up-to-date options based on your specific business needs.
5. Provide multi-factor authentication
One of the best online fraud prevention solutions is following multi-factor authentications (MFA). These are great for giving customers the ability to add extra security layers to their passwords. Currently, it’s common amongst fraud prevention solutions because more than 60% of organizations use MFA.
Whenever customers enter their passwords for completing online transactions, they receive a code through email or mobile to ensure it’s the same user and not a fraudster. This is a typical online payment fraud prevention tactic many organizations use to ensure complete verification from the user. It’s easy to do because even if a fraudster tries to hack into your payment details, they won’t be able to complete the transaction because they won’t have your mobile phone or access to your email password.
An MFA will usually require two authentication forms, each of them in a separate category:
- Possession: Either a credit card or phone.
- Knowledge: PIN or password.
- Inherence: Fingerprints or retina scan.
Additionally, other authentication methods include answers to secret questions or using biometrics such as facial recognition or voice.
6. Prevent friendly fraud
So, what is friendly fraud? It happens whenever a customer purchases online with a credit or debit card. Friendly fraud can also be known as chargeback fraud or friendly fraud chargeback. 23% of customers claim that they had a fraudulent charge on their credit card at least once in their lifetime.
Cardholders can claim a charge when fraud occurs, or they don’t receive the product or service they paid for. Online payment fraud detection can easily be done when you directly contact the cardholder and merchant. Cardholders will try to work things out before they file a chargeback initially.
There are three common types of friendly fraud:
- Customer confusion: Maybe at some point in time, a customer might forget that they made a purchase and won’t recognize their account statement. This will result in the online buyer contacting the bank.
- Customer dissatisfaction: This usually happens when the customer thinks the merchant deceived him. This is one of the most common types of friendly fraud. In most cases, they take this problem straight to the bank.
- Cyber-shoplifting: Some customers might falsely claim friendly fraud chargebacks. Some may think that disputing a charge will allow you to get your money back and get items for free, but it will abuse the process. This is definitely not a smart move and fraudsters will directly contact the bank, disputing a charge and lie about something. Additionally, they might lie about the fact that they couldn’t get in touch with the bank, but in reality, they have never actually contacted anyone.
7. Require the card verification value (CVV)
The first step to payment fraud detection involves asking users for a CVV. The CVV is either a three or four-digit security code on the back of your credit card. The CVV is effective because it makes it nearly impossible for fraudsters to get a hold of it.
How is it possible? Well, because they need to see the CVV on the back of your card physically, and it’s stored separately from your credit card number when you enter your details before making a payment.
8. Make your password requirements stronger
For you to make your fraud prevention online payment secure, you need to bump up the requirements for an effective password. It’s the same as when you sign up somewhere, and they show you a bar of how strong your password is.
Regarding online attackers, it will be easy for them to get past a password with a few characters and all containing small letters. When you ask users to input a password that requires capitalization and special characters (for example, *&^%$”), this reduces the chances of fraudsters getting past your accounts, especially when a payment is made.
Before you ask for a stronger password, inform your customers about it because they might not know. It’s best to educate before you ask for something, and you’ll gain some loyalty points for it once you’re consumer-focused. A few more messages can increase your customer lifetime value (CLV).
The truth behind protecting your online business
Fraudsters are everywhere and are closer to attacking you than you think. The worst part about them is that you never know when they are ready to attack. When you want to stop online attackers, you need to know that your fraud prevention solutions will help you reduce these attacks.
Otherwise, if you aren’t prepared, you’ll always face issues with fraudsters, hurting your business reputation and making future attacks more likely to happen.
