Online fraud is a growing menace to e-businesses and their customers as fraudsters target online payments using stolen card details.
The crucial thing to know before you start selling is that you will be responsible for any fraudulent transactions made at your store. It’s up to you to ensure that your customers are genuine. If you don't, you are liable for reimbursing cardholders whose cards were used without their authorisation.
The good news? WorldPay’s dedicated fraud-fighting tools will help you reduce your losses due to fraud.
But you need to take your own fraud prevention measures as well: many new online companies go out of business within six months because they fail to do so.
You'll also need to make sure any card payment information you store is protected against hackers and fraudsters who might attempt to steal credit card information. This is in order to comply with requirements introduced by the Card Schemes (called Payment Card Industry Data Security Standard or PCI DSS) to protect cardholder data. Large fines can be imposed for non-compliance or data breaches so it's vital you understand your obligations before you start accepting payments - have a look at our dedicated PCI DSS microsite for more information.
Why e-business appeals to fraudsters
Because there is no physical interaction with the card and cardholder, you are unable to:
- physically check the card's security features to ensure it is genuine
- verify the customer is the genuine cardholder via a signature or PIN
- guarantee that the payment information has been provided by the genuine cardholder.
Some online retailers don't understand the risks, don’t take steps to prevent fraud – and are easy targets for fraudsters.
Is my business high-risk?
Although all types of e-business can and do experience fraud, the following types of business and product are particularly attractive to fraudsters. If you do sell any of these products or services, we strongly recommend that you take the time to review your fraud controls, tools and company policy to ensure you are prepared:
- Financial services sector
- Gaming sector
- Computer and electrical goods inlcuding electronic toys, videogames and gadgets
- Travel sector
- Technology and telecommunications - especially Voice-over-IP services
- Domain name registration and web hosting
- Downloadable goods - the product can be downloaded and the fraudster is long gone.
- Fashion items, clothes, jewellery and accessories such as handbags and sunglasses for example
- Furniture especially modern and contemporary items
- Charities - can be susceptible to 'card testing' whereby fraudsters make small payments simply to test whether the card will be authorised, before they go on to use it to purchase expensive goods or services
- Any other highly desirable items that can easily be re-sold
High risk or not, you want to protect your business from fraud. This section advises you on spotting fraudulent activity and dealing with it before it damages your customers and your business.