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E-Commerce Payment Fraud: Tips on How to Fight Frauds

eCommerce fraud is a big, complex, and COSTLY problem that almost every e-commerce website faces.  Consequently, no matter what you sell, if you run a large or small business where money is involved, criminals will always be eyeing you.


What is payment fraud in eCommerce? How to detect and prevent it?



The Basics of eCommerce Fraud

eCommerce Fraud is any type of fraud that occurs on an eCommerce platform. Actually, eCommerce fraud takes many forms, including account takeover fraud, friendly fraud, card testing fraud, and more.


Types of eCommerce Fraud


While there are countless schemes that fraudsters can use, we want to highlight some of the most common types of eCommerce fraud. Among them:

  • Affiliate Fraud
  • Chargeback Fraud
  • Click Fraud
  • Returns Fraud
  • Reviews Fraud
  • Social Hacking
  • Vendor Fraud


One of the most common and critical types is fraudulent credit card payments. Access to stolen credit card data continues to grow year over year, as it becomes easier for cybercriminals to purchase this data on the dark web, oftentimes in bulk.


  • Stolen Cards. Whether they’re individuals or modern elements of organized crime, there’s a risk that some orders that you’ll receive will be made with stolen credit card details — fraudsters may physically have a stolen card with them, but more commonly they obtain compromised cards details electronically.  If you fulfill these orders, and a chargeback is placed by the owner of the credit card, you’ll be held responsible.
  • Friendly fraud (or chargeback fraud). It is when someone purchases an item or service online and then requests a chargeback from the payment processor, claiming the transaction was invalid. The credit card companies or bank returns the transaction value to the customer, which must still be paid by the retailer.
  • Card Testing Fraud (or card cracking). It is a widespread tactic used to defraud eCommerce businesses. Card cracking is when someone gains access to one or more stolen credit card numbers, through theft or by purchasing card data on the dark web.  The problem is that, not only can this abuse your website resources slowing down or tying up your site for real shoppers, it can cost you money.


Payment fraud is exactly the fraud type some of our Magento clients have faced recently:



How to Fight Frauds

There are a number of ways to protect your business against fraudulent payments and reduce fraud risk:

  • Maintain awareness of the latest fraud trends
  • Partner with a verified payment processor
  • Encrypt transactions and emails containing confidential information
  • Ensure that tokens and login credentials are regularly changed
  • Establish a policy regarding access to confidential information
  • Constantly run security checks with antivirus software
  • Require customers to log in to an individual account prior to making a purchase
  • Be extra vigilant during the holidays
  • Review customers and create blacklists


! Maintain PCI Compliance

The Payment Card Industry Data Security Standard is a widely-respected set of requirements ensuring companies storing and processing credit card information and cardholder information — like eCommerce companies — maintain a secure environment.  Ultimately, PCI compliance is mandatory, so you must ensure that you are abiding by relevant PCI guidelines to avoid any sanctions or penalties.


! Hire Cybersecurity experts

When you are trying to run a business, it is meaningless to do everything on your own. Hire an expert to keep track of the security issues, and they will help you maintain transaction safety.


! Take Advantage of Fraud Detection and Protection Solutions

This is one of the most effective ways to fight back against all types of eCommerce fraud. A fraud detection solution is helpful for eCommerce organizations of all sizes and is one of the best forms of fraud protection for eCommerce businesses.


eCommerce Fraud Solution

E-commerce sales have been at an all time high, and along with that growth are fraudsters ready to take advantage of unprotected—and under-protected—businesses. Now more than ever, e-commerce businesses need an eCommerce fraud solution that will protect revenue without prohibiting growth.


We’re happy to announce our latest partnership with Sift, the leader in Digital Trust & Safety.


Sift is the leader in Digital Trust & Safety, empowering digital disruptors to Fortune 500 companies to unlock new revenue without risk. Sift dynamically prevents fraud and abuse through industry-leading technology and expertise, an unrivaled global data network of 70 billion events per month, and a commitment to long-term customer partnerships. Global brands such as Twitter, Airbnb, and Twilio rely on Sift to gain a competitive advantage in their markets.


As a partner, Sift can provide you with industry-leading technology to dynamically prevent fraud and abuse while fueling business growth and protecting your bottom line.


Learn more about Sift and Digital Trust & Safety for Magento here.


Tips on how to stay a step ahead of bad actors

As digital business accelerates and adapts, so does the Fraud Economy. Consequently, no matter what you sell, if you run a large or small business where money is involved, criminals will always be eyeing you.


Moreover, we are seeing some Magento merchants being actively hit by carding attacks these days, especially against the backdrop of Magento 2.3 end of life.


How to protect your business and revenue from eCommerce fraud? Therefore, we decided to host an emergency webinar on that topic to share some tips on how to avoid this from happening and a what-to-do list in case that happened.


We asked fraud experts from Sift to join us to dig deeper into anti-fraud procedures.


Questions covered in the webinar:

  • The current e-commerce trends.
  • The importance of merchant trust for a brand.
  • How to implement Sift’s fraud solution with little to no code.




Jane Lee
Trust & Safety Architect @Sift

Jane Lee is a Trust & Safety Architect at Sift, who specializes in spam, account abuse, chargebacks, and payments risk. Prior to joining Sift, she was on fraud teams at Facebook and Square, and also spent some time as a Private Investigator.


Paul Ryazanov
Co-founder & CEO, MageCloud Inc.

Paul has 10+ years of experience in product development and marketing with a primary focus on eCommerce. He is a CRO expert and speaker at ConversionConference (Las Vegas), CloudConExpo (San Francisco), PubCon (Florida).


If you failed to attend live, here we are sharing the recording with you to watch whenever.


Watch the video below. 



Thanks for watching and/or reading! We hope you will find this webinar info useful and get something out of it for your business.





In conclusion, it should be clear that you shouldn’t ignore the problem until it’s too late! Start protecting your eCommerce business from bad actors right now!


If you would like to know how MageCloud and Sift can help your business, please contact us to start discussing your requirements. 


Stay SAFE! Sell online SAFELY!

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