Identity Verification: In this busy life, everyone opts for buying things while sitting on their couch. Since we are using the internet for everything including shopping so E-commerce business is increasing. But E-commerce is not a random whirlwind of people coming and going, buying stuff online, it has so many risks and frauds involved. E-commerce industry suffered an estimated revenue loss of $6.7 billion due to chargebacks in 2016 out of which 71% ($4.8b) was due to friendly/chargeback fraud. Every dollar of fraud cost E-commerce merchants $2.40 up from $2.23 in 2018.
A small E-commerce business containing 100 employees is more vulnerable than any other large scale business. The reason is that most of the small e-commerce businesses are following low-profit margin strategies and being operating on a smaller scale with limited resources; they tend to ignore the latest security algorithms may. Failing to comply with the latest technology, such businesses become the target of the fraudsters.
Imagine you are running an e-commerce startup, receiving a good number of orders daily, all the payments and shipments are on time and when at the end of the day you calculate your profit you find that you aren’t even close to your calculated payments. Shocked? Well, that’s where Fraud comes to light. The fraudsters are slowing taking away your hard-earned money without your knowledge. Now you are thinking that you could have prevented this fraud only if you have been more dedicated towards security like identity verification.
Identity Verification Types of E-commerce Frauds:
E-commerce frauds are of two main types which are as follows:
The first type is related to financial fraud. It occurs after the identity card verification process of a customer gets stolen and someone else purchases from the victim’s card. These types of frauds lead the company to chargebacks.
For example, you purchase some things online and at the end of the month, you receive your bill. You find that you are charged for an item that you didn’t even purchase. You complain to the e-commerce store and they show you proof that it is bought from your card only. Then you forward your concern to your bank regarding the misuse of your card. In such conditions, due to the contract between credit card company and E-commerce store, they are held liable to return your money.
Age verification is also crucial to avoid minors from buying anything. This may also lead to chargeback fraud or in some cases fines when minors are caught to purchase age-restricted products from your site.
The second type of fraud is related to the data breach. Where some person hacks into the database of the store and steals the customers’ data. This can also be done by some insider and late on, this data is sold in the black market.
The leakage of customer’s data is one of the major bottlenecks in the e-commerce industry. Because the data of the users not only contain personal information but also credit/debit card credentials. It makes the user as much vulnerable as the organization. Because the fraudsters can easily tamper some of the information and use it for their personal benefits.
Identity Verification: How to prevent these Frauds?
These E-commerce frauds not only cause a big loss but they can also put the reputation of an organization at stake. The online business industry is slowly moving towards Artificial Intelligence-powered verification services. Different companies around the world are working on the phenomenon of Artifical and Human Intelligence hybrid KYC verification services. Identity verification for fraud prevention in E-commerce sectors.
There is a famous proverb “Prevention is better than cure”. Keeping this thing in mind, it is better to adopt these fraud prevention services beforehand instead of waiting for the business to grow first. Using such services not only businesses can achieve a risked-proof. And a safe customer base, but, with the real-time verification results, the risk of fraud automatically reduces.