By Celine M  July 29, 2022

First Things First: what is the difference between eCommerce and mCommerce? eCommerce stands for electronic commerce, which refers to the buying and selling of goods and services done over the internet. It includes any transactions between businesses carried out online. mCommerce implies the use of mobile devices for shopping activities or buying and selling services online through a mobile device.

mCommerce is a channel that is growing rapidly for consumers to buy and sell products. mCommerce fraud a.k.a. mobile commerce fraud is becoming a serious problem and pressing concern for many online merchants.

People spend more time on the move these days; whether for work or leisure or just plain commuting. Hence, mCommerce is booming as users spend more and more time on their mobile devices. As a result, fraud attacks targeting mobile devices have increased in tandem.

We will discuss the types of mCommerce frauds in this article. There are three major types:

1. Account takeover fraud
2. True fraud
3. Loyalty app fraud

Account takeover fraud

Phishing and other forms of social engineering have conned many legitimate users to provide their account login information. For example, forged emails from various marketplaces that state users must login via a link provided to keep their accounts active. The embedded link will send the panicky readers to a fake website resembling the actual online store. There, any login attempts by the users will allow the fraudsters to capture their credentials.

Hackers also have another favorite tactic, which is to get users to install a mobile app to make purchases. The users are told that if they purchase via a 3rd party app, they can get a substantial discount. The app in question is usually a spyware or keylogger that records all of the user’s login actions including their usernames and passwords.

Malicious actors then use these compromised accounts to make purchases. These accounts often have payment methods like credit cards stored, thus making it effortless to make purchases.

True fraud

More and more consumers are using loopholes in the chargeback process. True fraud involves fraudsters making purchases from mobile devices using stolen credit card info. True fraud chargebacks occur when the purchase was not made by the cardholder, as in a case of identity theft. Unfortunately, this is the most common form of fraud. The main reason for this is because the dark web is flooded with hackers selling credit card info in bulk cheaply.

In recent years, many organizations have suffered data breaches either from their websites or having their Point-of-Sale (POS) terminals infected with malware. This has led to the customers’ payment information being stolen and resold on the dark web.

Loyalty app fraud

A loyalty program is a great way to interact and engage customers with your brand. It is one of the easy-executed programmes that being used by businesses to strengthen customers’ relationships. It is also a good idea to show your appreciation to your loyal customer so they are coming back.

Today, more and more businesses begin using loyalty programs in their marketing strategies. In short, businesses of all stripes run loyalty programs. Whatever the deal, it’s clear that loyalty programs are popular with consumers of all ages becauase it helps you retain existing customers, attract new customers, reduce turnover and drive profits.

In this type of fraud, the fraudster hacks into the loyalty app to steal gift card credits or credit card credentials. They may also abuse or exploit a company’s rewards program for criminal purposes, for example redeem loyalty points for its cash equivalent. This may cause an additional financial impact due to inventory losses.

How to Prevent Chargebacks From Happening in the First Place

The chargeback dispute process does not favor merchants. This is because they will suffer heavy financial losses due to chargeback claims filed by the real credit card owners. Merchants need to use fraud detection tools in their online stores to mitigate losses from fraudulent transactions. Fighting chargebacks takes time, expertise and manpower. So, it is advisable to look for a reliable fraud screening service than trying to fight fraud the manual way.

Conclusion

Online merchants can severely limit the damage that fraudsters can inflict on their businesses by using the fraud screening service. Apart from that, SMS verification is also an important method of preventing fraud and protecting customers information from being abused. Therefore, this 2-factor authentication is advisable to be implemented as an extra layer of security prior to any financial transaction.

Best of all, there are ready-made fraud prevention plugins and modules for the popular online shopping platforms which is free for installation and use. For examples: WHMCS, OpenCart, Shopify, Magento, PrestaShop, WooCommerce, BigCommerce, AbanteCart, CS-Cart, CubeCart, LiteCart, MiwoShop, osCommerce, WP E-Commerce, VirtueMart, ZenCart, PinnacleCart, Arastta, FoxyCart, Easy Digital Downloads, nopCommerce, Ecwid, WISECP and ThirtyBees.0000

Protect your online business from fraud by using FraudLabs Pro Fraud Prevention for FREE. Utilize the FraudLabs Pro SMS verification as the best option for 2-factor authentication in securing financial transactions.

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