e-commerce fraud

8 E-Commerce Fraud Prevention Tips for Small Businesses

What is one thing a small business can do during the holiday season to prevent fraud on their e-commerce site? 

To help you avoid fraud on your e-commerce site, we asked online business owners and professionals for their insights. From using reputable e-commerce platforms to investing in fraud protection, there are several things you can do to prevent fraud — especially during the holiday season.

Here are eight tips you can use to protect your e-commerce site from fraud:

Use a reputable e-commerce platform 

E-commerce fraud is the last thing you want to worry about during the busiest time of the year. One thing you can do as a small business owner is to use a reputable ecommerce platform, like Shopify, to create and host your store. These platforms have safeguards in place to protect your customers and your shop. For example, Shopify has built-in fraud analysis that uses machine learning to identify potentially fraudulent transactions so you can focus more on sales and helping customers.

Vanessa Molica, The Lash Professional

Review your return policies 

One of our core values is to be helpful, which can be applied to help prevent e-commerce fraud. Some fraudulent activity on a credit card can be attributed to charge-back claims due to a lack of clarity about return policies on a business’ website. Review your website and policies to see if they’re truly helpful to customers. Make sure your return policy is easily accessible and ensure your customer service team has the tools and training to help resolve customer issues easily during the holidays. 

Nick Santora, Curricula


Related:6 Ways E-Commerce Startups Can Compete with Amazon Shipping (and Win)

Invest in fraud protection

I believe that having a decent fraud protection system in place before the holiday season begins is ideal. This will help keep many fraudulent transactions at bay. Also, keep all of your systems up to date, including your charge-back management provider. This is a wonderful approach to avoid any mishaps in the online shopping process.

Peter Babichenko, Sahara Case

Ensure access to fraud prevention resources

We rely on Shopify’s best-in-class security and payment processing protection. This means that all year long, we can be confident that if there are any problems with purchases, we’ll be able to consult with the Shopify team to help make sure everything is on the up-and-up.

Stephanie Schull, Kegelbell

Keep an eye on real-time metrics 

Businesses are bound to see an increase in overall transactions during the holiday season. Keep an eye on red flags that  could indicate fraud. A spike in sales of a product with a high dollar amount is something to investigate.

Aidan Cole, Nailboo

Cross-reference shipping and customer names

During the holiday season, fraud occurs in all shapes and sizes. However, perhaps the easiest and most effective way to spot fraud is by cross-referencing shipping and customer names. Certainly, gift purchases will occur. However, an easy and polite way to ensure that all purchases are valid is to send a quick yet polite email asking the customer to confirm their address and provide a phone number for confirmation. 

If the customer does not respond, tell them that you will not fulfill their order until there is an answer. If they do confirm their address and phone number, simply drop them a quick call to double-check their identity. Although fraud identification is an arduous process, doing the work up-front will eliminate headaches in the future.

Lori Price, PixieLane

Block unrecognized domains 

Payment fraud is a serious issue and becomes even more difficult to manage when the perpetrator is untraceable. To ensure that fraudsters don’t conduct fraud on your e-commerce site, make sure to vet for suspicious-looking email domains. 

At checkout, automatically block random-looking, unrecognized domains such as “u441” or “g6yk.” This is a clear sign of suspicious activity. Instead, make sure that customers are only able to use Gmail, Hotmail or a similarly authentic business email. That way, you can ensure that purchasers provide some personally identifiable information.

David Batchelor, DialMyCalls

Encrypt your website

One thing a small business should be doing if they aren’t already is using HTTP + SSL (HTTPS) to encrypt their website. SSL establishes a secure link between the web browser and the server. This ensures that all traffic is encrypted, private, and secure. This is essential for all e-commerce websites so that all transactions and financial information are protected and private. If you are looking to protect your customers and website this holiday season, be sure that your ecommerce website is utilizing SSL encryption.

Jason Butcher, CoinPayments


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