When the pandemic started, people turned to online shopping. Internet traffic increased by 60% and the amount of money spent online increased by 50%.
With the increase in online shopping, the amount of money lost to e-commerce fraud will surpass $200 billion this year.
One of the most common forms of e-commerce fraud is carried out against retailers. It’s known as return fraud.
This is when customers claim they didn’t receive an online order, even if they did.
This fraud skyrocketed during the pandemic when warehouses were backed up and delivery companies couldn’t keep up.
The way it works is a consumer places an online order with a retailer. After the package arrives, the consumer calls the retailer and says they didn’t receive the package.
The crazy thing is that there are professional fraudsters who you can hire to do this on your behalf.
These so-called professionals know the ins and outs of major companies’ return policies. They know the loopholes and the right words to say to the customer service department.
The thing is that many retailers will simply issue a refund. The company wants to keep the customer happy.
Since the pandemic many carriers stopped requiring signatures for deliveries. And even if there was a signature, many people just scribble the signature.
So, it’s hard to prove the signature is legitimate.
Also, fraudsters will often write down the wrong name for the signature. That way they can claim that the package was delivered to the wrong person.
This type of fraud is one of the reasons that companies such as Amazon take pictures of deliveries.
I’m sure you’ve seen the picture from Amazon of your front door and the package sitting there. It proves that the package was delivered to the correct address.
The biggest issue for retailers is that most of them can’t afford to upset customers. So, they want to make the return process easy.
But this has opened the door to widespread fraud.
As criminals become more sophisticated with e-commerce scams, they will have more effect on customers.
Considering this, here are a few of the most common e-commerce scams and how they could affect you.
Instant payments:
Real-time payments are transactions that occur instantly.
It means that if you buy something online the money you give them is instantly there for them.
One example of real-time payment is cryptocurrency.
The thing with crypto or mobile payments is that fraudsters can collect money and then cash out and never send you your goods.
They can convert the money to other currencies and launder it through bank accounts.
If a retailer requests that you use crypto or instant payment services, you should always have the option to use a credit card if you want.
Any legitimate company should be fine with a debit or credit card payment that could take a few days to post.
Automated bots:
Fraudsters are increasingly using automated bots to impersonate retailers. The goal is to use social engineering tactics to get information from customers.
For example, someone might call you and pretend to be from Amazon customer service.
Since Amazon is so popular, chances are the fraudsters would be contacting an actual Amazon customer.
The fraudsters use voice bots to ask identifying questions. They even use the information to submit fraudulent transactions.
If you receive a call from a retailer that you use, be cautious providing them with any information.
For instance, if a company calls to discuss your recent order you should call them back on a number from the website.
You need to treat retailers like you would your bank.
Don’t share any personal information over the phone. Call them at a legitimate number to discuss an issue.
Supply chain:
The supply chain issues of the past few years have opened opportunities for retail fraud.
When supply issues emerge, fraudsters jump at the chance to meet demand.
Think of all the products that have gone out of stock in the past few years.
As soon as this happened fraudsters used fake websites to advertise products in stock.
The goal of scammers is to convince buyers that an item is in stock and to get them to pay for it.
But the reality is that the item isn’t in stock or it’s not the same item that the person thought they were buying.
It’s easy to set up a fraudulent business and generate a few positive reviews. When consumers are desperate, they will spend money without verifying the website.
By 2023, e-commerce sales are expected to account for over 22% of all retail sales in the U.S.
This will no doubt lead to an increase in e-commerce fraud such as the methods mentioned above.
Use these tips to keep yourself protected from fraud.
