7 Types of Fraud E-Commerce Sellers should Lookout for

 Any company that decides to start an online business or to move into a multi-channel approach, making its offer available online, is going to deal with new issues and threats. Online frauds are radically different from ones typically seen in brick-and-mortar businesses. The first fundamental difference is that you can’t see your transactions’ counter-party. This fact makes it harder to verify the identity of the person purchasing on your site.

The following types of online fraud are usually addressed to those companies who sell goods or services. Fraudsters may be interested to obtain funds, merchandise or expensive items to resell.

There are 7 types of fraud e-commerce sellers should look out for:

1. Credit Card Fraud

Fraudsters often make online purchases using stolen credit cards details. Sometimes they may be in physical possession of the card, other times they could have gained all the information electronically. The moment the transaction is concluded and payment approved, the business is responsible for ensuring that the customer was who he said he was. The card owner may seek reimbursement to the Company equal to the amount of the payment.

2. Refund Fraud

In this case, fraudster using a stolen credit card makes an overpayment on purpose. After which, he contacts the business to signal an accidental overpayment and asks for a reimbursement. He will ask to refund of the excess amount, claiming his credit card is closed so they need to send the money using an alternative method. That means that the original charge of the credit card is not refunded and the business is responsible to the card owner of the full amount.

3. Merchant Fraud

Typical of marketplace businesses, in which the Marketplace is responsible for both the consumer and the seller. In the present case, fraudster sells and receives the payment for no-existent items. Even in this case, it is the business who is responsible for the reimbursement.

4. Card Testing

Card testing fraud is the practice of creating and testing the validity of a credit card number, in order to use it on another website to commit fraud. Fraudster target websites which give a different response for each type of decline: for example, when a card is declined due to an incorrect expiration date, a different response is given, so they know they just need to find the expiration date.

5. Friendly Fraud

Also known as Charge back Fraud, it occurs when a consumer makes an online purchase and then claims his credit card has been stolen and asks for charge back after receiving the purchased goods or services.

6. Identity theft

It is one of the most common types of fraud. In this case, fraudster carries out an online purchase using a different identity. This enables fraudster to order items online under a false name and using someone else’s credit card.

7. Phishing

In this case an email asks for user ID, passwords, credit card details and other personal information. The sender seems to be a credit institution that needs a confirmation of some information due to a change in the system. Phishing allows criminals to get access to bank or other accounts and it can be used for identity theft.


E-commerce is one of the most breached areas by cyber criminals. Losses caused by online frauds are about EUR 4 billion, with an increase of 15% per year. Any online retailer should provide a protection system in order to limit damages caused by online threats.


The best scenario would be to prevent fraud from occurring. The first step is to monitor and check every order, being careful to the matching of IP, email and shipping addresses. Pay attention to international transactions, since most of credit card fraud cases are from foreign buyers. So pay attention if the billing and shipping addresses don’t match. And last but not least, equip your business with a fraud protection service. In any case, the best defense for your online business is being aware of the threats that are out there and knowing what to look for.

What are some of your tips to work against e-commerce fraud? Tell us below or tweet us!

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Sara Ristagno was born in 1993 in Sicily. At the age of 18 she started studying Economics and Management at Luiss Guido Carli University, Rome. Graduated in 2016, she is now working in UnFraud.