Chargeback fraud happens when a customer uses the bank’s chargeback feature to fraudulently claim that goods or services haven’t been received, or reclaim funds back from a “fraudulent” transaction using that card. It’s also known as friendly fraud, but it’s anything but friendly.

Businesses are disproportionately affected by this type of fraud as they are typically the party to lose out due to consumer protection regulations. 

What is Account Takeover (ATO) fraud?

Account Takeover (ATO) fraud is a particularly serious type of ecommerce fraud because individuals can be conned into sharing account details as well as losing money, making the deception feel much more personal for the victim.

ATO fraud happens when a criminal gains access to a user’s account on an ecommerce store or website which then enables them to use the account. They gain access by either purchasing leaked login details and personal information on the dark web or using phishing scams. 

Once a criminal gains access to an account, they can change delivery addresses, place orders using saved account details and lock the genuine customer out of their account. The seriousness of this type of ecommerce fraud is compounded by the fact that many people struggle to remember passwords, and so repeat details for all manner of accounts despite advice from police and authorities fighting fraud not to do so. 

From a business perspective, even if you have taken all reasonable steps to prevent ATO fraud, your reputation can still be affected by association.

What is triangulation fraud?

With triangulation fraud, a scammer needs an unsuspecting shopper and an ecommerce store. The fraudster creates their own online storefront using an ecommerce platform and sells popular products at a lower price than what can be found elsewhere. Hiding behind the validity of the storefront that they have replicated or piggybacked off, the criminals collect payment details and then use them to purchase the product on the genuine website so the customer receives their goods and for a short time is unaware that their details have been stolen.

Most ecommerce customers consider themselves to be pretty savvy but when there are criminals out there desperate to deceive, even careful shoppers can be taken advantage of. Triangulation fraud is a great example of this.

It is easier than you think for this type of fraud to work. Consumers have a higher average spend when shopping using a desktop computer. This makes sense because if someone is spending a lot of money, they may be more conscientious and careful with their purchases, and feel like desktop is a more secure method of purchase. 

The average spend on mobile devices is lower which suggests that there could be a tipping point with purchases under a certain amount being slightly less considered, leaving shoppers vulnerable to fraud. 

Additionally, a 2018 study found that over three-quarters of the British population use a second screen when watching television which could mean shoppers are less attentive and vigilant to fraud when purchasing online at lower price points.

What is interception fraud?

Interception fraud happens when a fraudster attempts to intercept a package either legitimately placed by a customer or that they have placed themselves using genuine billing and shipping details. As the details on the face of this are genuine, the transaction goes through with the targeted business, and the consumer unaware of fraudulent activity. The fraudster then attempts to intercept the order in usually one of three ways:

1. The fraudster makes a seemingly legitimate claim to an ecommerce store’s customer service department to change the address before shipment is sent. 

2. They wait for the delivery to arrive and attempt to physically intercept the package at their victim’s front door.

3. The criminal contacts the courier directly with genuine tracking information to get the package rerouted to another address.