eCommerce Fraud Losses Across Major Industries

Jul 25, 2018

Online payment fraud doesn’t stop to be a threat. Merchants in the US are overwhelmingly attacked by fraudsters. The eCommerce industry’s loss accounts for billions of dollars due to chargebacks. Is chargeback insurance something you’re interested in? Just go on reading this article and you’ll learn what you need.

Fraud Losses: Need Chargeback Insurance?

eCommerce companies are applying more advanced fraud prevention solutions, and fraudsters go on improving their methods to “keep up with them.” Fraudsters obtain login credentials with social engineering. They hack databases or just purchase them on the Dark Web.

Merchants are losing more and more transaction amounts. On the one hand, they’re losing money from shipping and the insurance costs related to fraudulent transactions. Moreover, merchants spend more revenue on obtaining the latest fraud-prevention solutions. Additionally, they deal with manual reviews, false positives, and chargebacks.

In fact, payment processing fraud affects both card-present (CP) and card-not-present (CNP) merchants. However, it’s more widespread among CNP transactions.

By the way, false positives contribute to fraud losses to a great extent. Their impact is even greater than that of the true fraud losses in fact. False positives or declined legitimate transactions are extremely common in eCommerce.

When it comes to the account takeover fraud, which is one of the major threat attacks, isn’t going to stop anytime soon. Deloitte, Sonic, Whole Foods, and even the US Securities and Exchange Commission (SEC) have experienced data breaches of unknown severity.

With all this being said, you should be prepared from the very moment you start processing transactions. You should do your best to reduce chargebacks. Chargeback insurance is something that merchants are interested in when turning to eMerchantBroker.com, a reputable payment processor that’s voted the #1 high risk credit card processing company in the US.

Rated A+ by the BBB and A by Card Payment Options, EMB offers a chargeback mitigation program called “Chargeback Shield” to reduce merchant ratios. In partnership with Verifi and its new Cardholder Dispute Resolution Network (CDRN), as well as with Ethoca and its alert system, eMerchantBroker.com provides merchants with a unique, elite chargeback protection and prevention system to help them pan out.

Major Industries Under Fraud Attacks: Most Popular Attack Methods

Undoubtedly, avoiding online fraud isn’t becoming less challenging. Here’re industries that’re commonly attacked:

  • Alcohol, tobacco, and cannabis
  • Apparel
  • Consumer electronics
  • Cosmetics and perfumes
  • Department stores
  • Furniture, appliances and home improvement
  • Health, leisure, and hobbies
  • Jewelry and precious metals

By the way, for retailers, the apparel industry shows perhaps the most significant growth in fraud attack rates.

Well, here’re the types of online fraud attacks:

  • Identity theft
  • Chargeback fraud
  • Friendly fraud
  • Clean fraud
  • Triangulation fraud
  • Affiliate fraud
  • Merchant identity fraud
  • Advanced fee and wire transfer scams

Now, let’s focus on the two main types of eCommerce fraud attacks:

  • Identity Theft – the Main Threat

Fraudsters’ main goal is to use others’ personal information and place an online order. Identity theft is also associated with the concept of “man-in-the-middle attacks.” In this case, fraudsters get access to the victim’s credit-card data and copy it as it’s transferred online.

In eCommerce, this is the retailer who normally pays for the transactions. Chargeback fraud is one of the most widespread subtypes. In the case of an identity theft, fraudsters use the target retailer’s and the vendor’s private data. From here, we have the name “merchant identity fraud.”

  • Account Takeover

This is when fraudsters intentionally act like real customers. They get control over an account and complete an unauthorized financial/information transaction trying to gain a material benefit. This refers both to bank and credit card accounts, store and email accounts, etc.

eCommerce fraud is growing all over the world as the number of consumers shopping online increases. The fraud landscape is constantly undergoing changes. This phenomenon demands an adaptive approach, otherwise, you’ll lose the game. Remain vigilant against online fraud and work with reliable and secure payment processors to fight fraud and chargebacks with ease.

Let us help you get a high risk merchant account today!

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Having a merchant account allows an account holder to take advantage of merchant cash advances. When a merchant is approved for an advance, the business agrees to receive a lump sum of cash in exchange for an agreed-upon percentage of future credit card sales.

Pricing varies depending the merchant’s industry, past credit card processing history, the type of business seeking the account, average ticket sales, and average transaction volumes.

Yes, EMB works with merchants who are building their credit, as well as those who have poor credit. EMB also approves merchants that have no credit card processing history and businesses that have lost their merchant accounts due to high chargebacks.

Several factors influence a merchant’s risk level. Though only one factor likely will not get a merchant classified as high risk, a combination of these may: business size, location, and industry, credit score, credit card processing history, a industry’s reputation for excessive chargebacks, a prior history of high chargeback ratios, and whether a merchant exclusively sells online.

Virtual terminals are stationed on a merchant’s website, making it easy for customers to make a payment or purchase online. Merchants or a payment processor can easily set up virtual terminals, so online businesses can accept credit and debit card and e-check transactions.

A merchant account is a business account with an acquiring bank. Without this business account, which actually works more like a line of credit, a merchant cannot accept and process credit and debit card transactions. Businesses need a merchant account to accept major credit cards via a static point-of-sale terminal, mobile card reader, or through a virtual payment gateway.

After filling out EMB’s simple online application and submitting any necessary, requested documents, many merchants get approved within 24 and 48 hours.

EMB specializes in working with high-risk merchants. EMB works with many merchants, including but not limited to businesses in these industries: gambling and gaming, adult entertainment, nutraceuticals, vaping and e-cigarettes, electronics, tech support, travel, high-end furniture, weight loss programs, calling cards, e-books and software, and telecommunications.

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