Online payment fraud now goes hand in hand with the eCommerce industry—so much so that the bad guys realize its potential and are continually inventing new ways to target businesses that have an online presence (which, by the way, is pretty much every business nowadays).
No doubt you’ve heard of Software as a Service. But Fraud as a Service?
Say hello to the new face of organized crime.
So-called “friendly fraud” (i.e. chargebacks) may not be your biggest problem anymore, especially now that cybercriminals are taking advantage of the dark web and coming up with new and creative ways to commit fraud.
And no wonder—the anonymity of cybercrime, coupled with the big potential for profit, seems right up their alley.
But what about the merchants who suffer steep costs as a result?
And no wonder—the anonymity of cybercrime, coupled with the big potential for profit, seems right up their alley. But what about the merchants who suffer steep costs as a result?
Just look at the retail giant Target, poised to pay nearly $20 million in settlement fees because of a massive security breach caused by cybercriminals.
Home Depot suffered similar losses from its own data breach back in 2014.
And those are the big guys with advanced anti-fraud protocols and systems in place.
What about small businesses that lack the sophisticated technology necessary to prevent and fight online fraud?
Despite a slight decline in overall fraud, merchants should stay vigilant.
According to the 2017 Global Fraud Index™, released in part by online B2B content platform PYMNTS.com, fraud, on the whole, has decreased by nearly 35 percent between early 2016 and early 2017. But…
(There’s always a “but.”)
In that same report, we find that fraud targeting online department stores increased by more than 146 percent, and orders totaling $500 or more had a total fraud rate of nearly 11 percent—over 20 times higher than orders under $100.
Also according to the Global Fraud Index, “…fraudsters are targeting more transactions at higher values and more transactions overall, indicating that fraud is actually growing faster than eCommerce sales.”
Not exactly a comforting thought.
Why is Fraud as a Service so hard to combat?
Bottom line: cybercriminals are clever.
If they can’t do something one way, they’ll figure out another way.
Often when federal authorities manage to shut down a FaaS site on the dark web, another site offering the same product or service quickly takes its place.
And what are they offering?
Anything from consumer account information to malware and botnets used to orchestrate cyber attacks—with the kicker being that many of these FaaS sites offer money-back guarantees and even discounts or other incentives.
Turns out even fraudulent businesses think good customer service is important.
3 ways FaaS hurts your business
For small businesses especially, fraud can be costly in more ways than one.
Here are three ways you could be on the losing end of FaaS-based offerings:
- Loss of revenue: The immediate effect of fraud is its impact on your bottom line. Merchants can suffer significant losses, and many times the road to recovery is a long one.
- Loss of reputation: You’ve worked hard to build your business and make a name for your brand, but just one security breach can damage your reputation and cause potential customers to look elsewhere for goods and services.
- Loss of customer confidence: The rise of online fraud is making consumers nervous, and many admit to increasing concerns about their online privacy. In a recent Global Survey on Internet Security and Trust, nearly half of those surveyed said their main reason for not shopping online is lack of trust.
Steps you can take to protect yourself from fraud
Online fraud is not going away. If anything, it’s growing just as fast as eCommerce.
That means merchants need to stay vigilant and be proactive about protecting your online presence. How can you do that?
- Protect your website. Constantly monitor the safety and security of your entire website, not just individual transactions. Make sure your services and systems are PCI compliant. Use a verified security service to reduce the risk of fraud and give your customers peace of mind.
- Secure your transaction data. Make sure any and all data you collect and send is encrypted. Avoid storing data on any of your systems, and always destroy the data immediately after processing so it cannot be used by anyone else. If you think your data has been stolen or compromised, report it to your payment provider immediately.
- Watch for suspicious email addresses. Does the email address on the order read something like email@example.com? That’s a pretty good indication you’re receiving a fraudulent order.
Read our blog How to Avoid Fraud for more key fraud prevention tips and other things to watch out for.
Protecting your business from fraud is a full-time job, but because fraud prevention methods are changing constantly it can be hard for smaller businesses to stay on top of what their potential vulnerabilities may be.
Plus, you need to focus your energy elsewhere—on attracting customers and growing your business.
Security breach? Not on our watch.
How about you focus on your business and let MyWatchmen keep an eye on your bottom line?
Our loss prevention experts can help you identify threats to your online security by conducting a detailed analysis of your current processes and procedures.
Here at MyWatchmen we are constantly analyzing the business and payment processing landscapes to stay current with the most recent fraud tactics and activities, including the latest fraud prevention technology, to help protect your business from fraud.
Ready to build a stronger, safer online infrastructure and stick it to the cybercriminals?
Call us at 1-888-256-2845 or email firstname.lastname@example.org.