To supply the growing trend of online shopping means there has also been a growth spurt in shops cropping up online.
Today there are more than 26.5 million eCommerce sites globally.Thats a massive increase from the 9.2 million in operation in 2019– a 188% increase to be exact.
With so many shops there are even more dollars being spent. Total eCommerce sales are projected to reach $1.065 trillion by the end of 2023.
With this expansion though, there is also the expansion of online fraud, not just attacking potential customers, but the eCommerce shop owners as well.
Keeping this in mind, have you considered how to protect your eCommerce business?
Protect Your eCommerce Business: Secure Payment Systems
If you have ever made a purchase with common payment options besides cash, then you are already familiar with payment systems.
Payment systems are the electronic arrangements that facilitate the transfer of funds from one place to another. For example, when you swipe your debit card, the internal payment system notifies your bank to initiate the movement of funds needed from your checking account to the seller. And it often happens faster than it took you to read that sentence.
Online and eCommerce payment systems include PayPal, Venmo, Square, and any of the available digital wallets. Though these may not have a physical card connected to them, they are still connected to our bank accounts just like our physical credit and debit cards are.
Understanding their connection and operation in tandem with sensitive information makes the number one suggestion to protect your eCommerce business of utilizing a secure payment system pretty much a no-brainer.
How to Use Secure Payment Systems to Protect Your eCommerce Business:
Some simple steps to secure your payment systems include…
- – Use reputable payment gateways that offer robust security measures like encryption and fraud detection.
- – Implement multi-factor authentication for customer transactions.
- – Regularly update your systems to stay ahead of potential vulnerabilities.
Protect Your eCommerce Business: Fraud Detection Tools
Just as much as you want to secure the sensitive information held in the transactions made between your happy customers and your eCommerce business, the cybercriminals want to crack into that security.
And, unfortunately, they are successful sometimes. As of 2023, the global average cost of a data breach was around $4.45million, but in the U.S.? It doubled with an average cost of $9.48million per year.
The tools made available to prevent these types of breaches– no matter the scale or size– are invaluable in detecting if fraudulent activity appears. Detecting fraudulent activity is important in taking the steps needed to protect your eCommerce business.
If you use a specific (and secure!) payment processing system for your virtual storefront, those systems often have a number of compatible and highlighted fraud detection tools they recommend. Finding the right fraud detection tools to protect your eCommerce business can feel like a lot sometimes, but there are a number of resources available that will help you navigate finding what works for you.
How to Use Fraud Detection Tools to Protect Your eCommerce Business:
Employing fraud detection tools will help you in a number of ways. Getting started can be as simple as…
- – Invest in software that can detect fraudulent activities, such as abnormal purchase patterns, suspicious IP addresses, or mismatched billing information.
- – Utilize machine learning algorithms to identify and flag potential scams.
Protect Your eCommerce Business: Customer Verification
In the above section, we spoke about the importance of fraud detection tools. These tools operate in ways that help identify fraudulent activities. Identification is a huge part of knowing if the individual accessing your site is safe, secure, or otherwise a threat.
A common form of verification is more familiar than you would think. We’ve all been asked if we are human, if we can read the skewed letters in a box, or if we can click on every square that has a bus in it. A captcha test asking for a user to engage with a prompt has been seen across the internet since its inception in 2000.
How to Verify Customers to Protect Your eCommerce Business:
In addition to utilizing systems and tools designed to protect your eCommerce business, there are a few habits that can add layers of protection.. .
- – Authenticate customers by verifying their identities through various means, such as phone number verification, email confirmation, or address validation.
- – Implement strict policies for new customers or high-risk transactions, requiring additional verification steps.
Protect Your eCommerce Business: Monitor & Analyze Transactions
Even with the tools, programs, and practices you may employ on the front end of your eCommerce business’ payment processing, the steps needed to protect your eCommerce business don’t stop there.
As transactions begin to come through, it’s important to implement a transaction monitoring practice that will help you identify the different types of fraud that might be making it past these tools.
Its not the most fun to see your business growing in its online sales and having to keep an awareness in the background that some of the purchases may actually be fraudulent activity. Taking the steps to protect your eCommerce business, though, can help alleviate some of the associated stress.
How to Monitor & Analyze Transactions to Protect Your eCommerce Business:
You are already watching the activity that moves through your site. Remember to also…
- – Keep a close eye on transactions for irregularities or sudden spikes in activity.
- – Utilize analytics to identify trends and patterns that might indicate fraudulent behavior.
Protect Your eCommerce Business: Stay Informed about Scam Techniques
To adequately monitor all the transactions on your site, looking for that potential fraudulent activity, you need to know what you are actually looking for.
Like I mentioned above, just as advanced as secure payment systems and fraudulent detection tools are, the individuals looking to scam your site are evolving as well. Sometimes its not even a fine tuned program or virus, rather a “new way” of scamming you and your business into gaining the items or information they are seeking.
These fraud techniques include Friendly Fraud, Receipt Fraud, Switch Fraud, Inventory Depletion, and so much more.
It’s these practices that lead to high chargeback fees; items being returned with a broken version in place of the new, working version most recently purchased; having an entire inventory bought and then sold in a false online storefront at higher prices.
Creative for the scammers themselves, but all in all, still a headache for the virtual store owner. Another reason why it’s so important to protect your eCommerce business.
How to Stay Informed about Scam Techniques to Protect Your eCommerce Business:
Your goal is to protect your eCommerce business. You have the systems, tools, and practices in place but it also takes being aware of what is happening in the sphere of scams. This includes…
- – Keep up-to-date with the latest scam tactics and trends.
- – Follow industry news and participate in forums or communities to learn from others’ experiences.
Protect Your eCommerce Business: Educate Your Team
I’m sure you’ve played the game telephone before. The playful transferring of information from one end of communication to the other, hearing how much gets lost and changed along the way.
While your business is growing, you don’t want to isolate information to one section and risk the loss of key elements to stay alert to in after-thought, or casual communication.
Having an aware and properly trained team can help in putting all the above elements into action and adding the extra layer needed to protect your eCommerce business.
How to Educate Your Team to Protect Your eCommerce Business:
Though it may feel like an added step, remember the benefits of giving the time in the beginning to prevent scams and fraudulent activity as it will save you more time taken in the event of having to resolve the preventable issues.
- – Train employees on recognizing common scam tactics and phishing attempts.
- – Create protocols for handling suspicious orders or customer inquiries to prevent inadvertent leaks of sensitive information.
Protect Your eCommerce Business: Implement Strict Return & Refund Policies
It can feel surprising to discover the place in the purchasing process ripe for scam activity is actually after the purchase is completed.
Unfortunately, about 10% of returns are implemented in some form of fraudulent intent. These scams often include purchasing a product and using it for the given time, returning at the last allotted moment of accepted returns. Alternatively, a product is bought a second time after the first purchase becomes damaged after extended use, with the defunct product being returned in the place of the newer, working product.
Some practices have been put in place over the years, from packaging or anti-return ribbons that, if removed, disqualify the item from being returned. There are also intensive checks on electronics upon receiving a return in order to ensure it hasn’t been swapped or had crucial material removed first before sending it back.
Implement Strict Return & Refund Policies to Protect Your eCommerce Business:
Though it is incredibly unlikely to be able to eliminate return policies altogether, it is possible to tighten the guidelines around accepted returns in order to minimize the opportunity for scammers to take advantage.
- – Have clear and transparent return policies to discourage scammers from exploiting loopholes.
- – Authenticate product returns to ensure items are genuinely being returned
Protect Your eCommerce Business: Customer Communication
Scams can take all shapes and forms and can affect more than just the online business they are targeting. As we talked about in our last blog entry about Online Shopping Cyber Security, the customers on your site alongside these scammers are at risk as well.
Scam activity can disrupt the easy and enjoyable online shopping experience for other customers and even go as far as targeting them with similar fake websites and products. The inventory depletion scheme alone identifies highly desired products that are then bought in full to diminish the availability from the original seller. In creating the product scarcity, they are then resold at higher prices.
Keeping communication open with customers, current, return, and soon-to-be, will help you identify fraudulent activity elsewhere that you may not yet be looking at. Building this trust, not only benefits the actors at play– you, your business, and your customers– but also strengthens the shared security of the industry you occupy.
How to Talk to Your Customers to Protect Your eCommerce Business:
Marketing can feel a bit like one sided communication with your customers, but opening the communication funnels in both directions will help you protect your eCommerce business.
- – Clearly communicate with customers about security measures in place to protect their information.
- – Encourage them to report any suspicious activity they encounter on your platform.
Protect Your eCommerce Business: Continuous Monitoring & Adaptation
At this point, its probably clear what it takes to protect your eCommerce business– and it may not have been what you originally thought.
Though online scams and fraudulent activity are a growing threat, the systems, tools, and practices available can help you fortify the security around your business, and encourage the kind of growth you want to see (that is, growth of your business, not the threats).
How to Monitor to Adapt and Protect Your eCommerce Business:
These suggestions supplied here aren’t just a one time implementation. There is a need for regular review as to become aware of new techniques, schemes, or trends. Knowing what is coming can allow you to prepare and protect your eCommerce business (and your customers) before the threat targets your virtual shop space.
- – Regularly assess your security measures and adapt to emerging threats.
- – Conduct audits to ensure compliance with security standards.
This time of year is filled with online shopping, both on the purchasing and selling sides. Even looking to the coming year, there are resolutions set to finally take your business a little further and open that online shop.
You’ve already started looking at all the ways you can protect your eCommerce business. Just know there are other ways you can add layers of protection to your business as a whole.
Talking to folks who are as committed to your business’ safe and secure success as you are is a great place to start.
With any questions you may have regarding the wide array of business insurance available, don’t hesitate to reach out!
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