A recent study published by market research firm Forrester estimates that e-commerce activity in the United States and Europe is set to generate more than $858 billion worth of sales revenue in 2018. However, nearly $19 billion will be lost to various forms of fraud.
Faced with losing billions of dollars to fraudulent activities, entrepreneurs and business owners are constantly looking for solutions to this growing problem. Hackers are increasingly setting their malicious sights on online retail transactions because of the massive growth in this sector.
One of the major challenges in this regard involves identifying the various types of fraud; given the dynamic nature of the online retail sector, hackers and scammers are always coming up with new strategies to ply their wicked trade.
Here are some common fraudulent scenarios along with typical solutions to mitigate their negative impact:
This is, without a doubt, the most damaging and pernicious problem affecting the online retail sector. Data breaches are at the heart of identity theft; in recent years, massive data sets have been stolen not just from merchant servers but also from large retailers, banks and even credit reportingagencies. The only solution is to keep strengthening payment card industry standards and network security.
Credit Card Testing
Not much is reported about this crime because it is highly technical and mostly practiced by underground credit card hacking rings. Essentially, hackers obtain partial lists of credit card numbers that do not feature full records.
The next step involves going online and testing purchases that will be rejected for various reasons. The key is to get the reason for the rejection; if it was an expiration date or card verification value, hackers can pore over algorithms and figure out the missing information. Once again, strict PCI standards and online checkout procedures are part of the solution against this fraudulent activity.
There was a time when this type of e-commerce scam was rampant on eBay. These days, it is more likely to occur on the third-party Amazon Marketplace. Bait-and-switch begins with an unauthorized seller listing products assigned to unique Amazon Standard Identification Numbers.
The next step is to hijack the ASIN so that purchase orders no longer go to the original seller. In the end, shoppers end up paying for products that they never wanted to purchase, and the reputation of the merchant ends up being tarnished. The best solution to prevent ASIN hijacking is to monitor Amazon products with a cloud-based service such as Brandlox.
This particular retail crime is very common on large e-commerce platforms, and it is a reason behind luxury brands opting to stay out of the Amazon Marketplace. The problem with Amazon counterfeiters is that they will use the aforementioned ASIN hijacking method to appear as if they are brand owners or authorized distributors. Although Amazon has tried to mitigate counterfeiting with programs such as Brand Registry and Brand Gating, active ASIN monitoring is still the best solution against counterfeiters in 2018.
Third-party sellers who choose Amazon as their main sales channel can trust that the company will do everything possible to implement PCI standards and avoid identity theft, but the same cannot be said about fraud perpetrated by means of ASIN hijacking and counterfeiting. The proven solution to combat Amazon unauthorized sellers and counterfeiters is through active monitoring, which is what Brandlox provides.
If you have introduced 10 or more unique ASINs to the Amazon Marketplace, you need to protect them with Brandlox, a subscription service that lets you know when your product listings are in the process of being hijacked. Learn more about Brandlox by contacting our office at (866) 848-6072.