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5 Common Types of E-Commerce Fraud and How to Prevent Them

Posted: December 17, 2021 at 1:00 pm / by / comments (0)

Ecommerce fraud involves illegal payment transactions where fraudsters and criminals use a false identity or stolen or fake credit cards to make purchases on a website without the account owner’s knowledge. The common types of e-commerce fraud include credit card fraud, affiliate fraud, and phone fraud.

Some of the signs to look out for include random emails, dubious phone calls, questionable job listings, unverified wire transfers, unknown emails, and text messages. Below are the common types of e-commerce frauds and how to prevent them.

1. Return fraud

Return fraud involves the abuse of a retailer’s returns policy by claiming illegal refunds. It’s a form of “friendly fraud”, where the real motive is to make a profit through deception. Some fraudulent returns to look out for include wardrobing, seller sabotage, deliberate fraud, empty box fraud, stolen merchandise return, and more.

To stop return fraud, eliminate cash refunds, require ID and contact for returns, update your return policies, and read your buyer’s digital footprint. In addition, you can leverage fraud detection software to determine whether you’re dealing with a legitimate customer or a fraudster.

2. Identity theft fraud

Identity theft occurs when someone steals your personal information to commit fraud. The stolen data may be used to apply for credit, get medical services, or file taxes. To identify ID theft, look out for bills for things you didn’t buy, debt collection calls for accounts you haven’t opened, and denials for loan applications.

To protect yourself against ID theft, create complex passwords and change them regularly, update sharing and firewall settings, and periodically review your credit reports. You may also freeze your credit files to deter fraudsters and others from accessing or transacting using your accounts.

3. Credit card fraud

Credit card fraud involves the unauthorized use of a credit or debit card to make purchases from a web merchant. Fraudsters don’t need to physically have your credit card to commit this fraud; your card data is enough. Knowing the signs of credit card fraud will help you identify potential threats and use appropriate methods to protect yourself. To prevent credit card fraud, avoid insecure websites, use credit card readers, get a chip card with PIN capacity, use a password manager, avoid sharing personal information online, and get a virtual credit card number.

4. Affiliate fraud

Affiliate fraud is a fraudulent activity in affiliate marketing whose aim is to generate affiliate commissions. Here, fraudsters manipulate the system to defraud online retailers using a fake activity to develop or increase the number of commissions. To prevent affiliate fraud, closely monitor traffic and program analytics, block suspicious IP addresses, remove unscrupulous affiliates and take advantage of a fraud prevention tool.

5. Phishing attacks

Ecommerce retailers provide customers with accounts to store financial data, personal information and purchase history. Through phishing schemes, cybercriminals into those accounts using tactics like sending emails to trick customers into revealing their data like passwords and usernames. Using this information, they log into customers’ accounts, change passwords, then make unauthorized purchases. To prevent phishing scams and attacks, use spam filters, configure browser settings and ensure the URL begins with HTTPS.


Ecommerce businesses and consumers are susceptible to various types of fraud. Knowing the possible frauds and how to identify them will help you develop preventive measures. Use the above tips to identify and prevent fraud.

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