How SMEs can avoid rising COVID-fuelled e-commerce fraud

With changing restrictions and intermittent lockdowns across the country, the uncertainty of 2020 saw more shoppers than ever before make the move online. Unsurprisingly, many Australian SMEs have moved sales online and improved their existing digital experiences for customers.

As we break into a new year, now is a great time to reflect on the impacts COVID-19 is having – for better or for worse. The ABS shows that retail turnover for November 2020, including online sales, rose by 7.1 per cent month-on-month. Perhaps even more interestingly, Australian retail turnover increased by a huge 13.3 per cent compared to November 2019.

Despite the challenges, momentum is strong. There’s no doubt this is largely down to the speed at which consumers have adapted their shopping habits. But what does a rapidly increasing online sales mean in a world where cyber threats are a serious issue? To put this in perspective, while a report by Australia Post reveals that online sales alone jumped by almost 17 per cent in November 2020, online shopping scams also edged upwards late last year with over $8 million lost to fraud throughout the year.    

Here are some of the steps you can take to minimise the chances of fraud in what could be another record-breaking year.

Look for suspicious activity  

There are a few things you can look out for which might signal fraudulent activity. Receiving a bulk order of items that aren’t usually bought in bulk? Could be a sign that someone is maximising the credit on a stolen card to purchase items for resale. Similarly, multiple credit cards used across orders could mean transactions aren’t being made by the rightful cardholder.

Look out for what’s known as “friendly fraud”. In this case, a customer might place an order before calling or emailing to dispute the transaction and seek a refund. Keeping a record of your customers’ order history and communication is vital to preventing repeat scams like these.

Use two-factor authentication

Ensuring your customers are who they say they are is important to reducing the chances

of eCommerce fraud. A simple username and password is rarely a watertight solution.

Introducing two-factor authentication is an effective way to shore up payment security because it layers two different methods of authenticating your customers such as requesting a username and password before sending the customer a unique PIN code via SMS.

Integrate biometrics technology

Biometrics technology in the eCommerce space is likely to become an increasingly valuable tool for reducing fraud. Biometrics can be integrated with your two-factor authentication process to become what’s known as ‘multi-factor’ authentication.

Biometric markers to verify a person’s identity – such as voice recognition, facial recognition, or fingerprints – are a step up because these unique personal identifiers can’t be hacked or replicated by criminals.

Use a payment gateway with accurate fraud prediction capabilities

Your payment gateway should be one of the strongest lines of defence. The most sophisticated payment gateways have access to consumer behaviour data to make real-time payment authorisations while blocking transactions that bear any of the hallmarks of fraud.

Your provider’s technology should keep you in check with the different types of fraud impacting eCommerce. It’s also essential to avoid false declines, where legitimate transactions are mistaken for fraud. False declines can not only affect your bottom line, but they could also dampen your customers’ online experience and damage your reputation.

2021 is the ideal time to pick up the pace with your business’ fraud protection strategy. After all, with revenue in eCommerce expected to continue to grow, there’s no turning back from consumers’ increasing reliance on digital sales and all the benefits (and risks) that come with it.

Aaron Camilleri, Product Director, Live group

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