In this article, we delve into the critical role of advanced security measures in strengthening online businesses. We explore how modern security solutions, including state-of-the-art encryption, multi-factor authentication, and AI-driven threat detection, are essential in today’s digital landscape.
We also discuss the ever-evolving threat landscape, emphasizing the risks online businesses face, such as cyberattacks, data breaches, and identity theft. Real-world case studies showcase the tangible benefits of implementing cutting-edge security solutions, highlighting their role in preventing security breaches.
The Case For E-Commerce Cybersecurity In 2023
In 2023, there are new cybersecurity challenges that e-commerce businesses, perhaps different or more advanced to those you’re typically used to facing. Mention how e-commerce fraud is on the rise generally, due to more customers incorporating this into their shopping habits.
According to PwC’s Cyber Security Outlook 2023, 90% of businesses have experienced greater cyber risk due to increasing digitisation in the last two years (which includes factors like migrating to cloud servers or engaging in e-commerce).
Social Engineering Is Becoming Increasingly Complex
Take for instance the rise of social engineering – and so phishing – is becoming more advanced with the help of more sophisticated tools. By pretending to be a trusted person via AI-created deepfakes, or generated text, fraudsters can trick your employees into providing sensitive data.
For e-commerce sites alone, data breaches of this nature have cost them $48 billion in revenue. As social engineering strategies become more advanced and so harder to detect, even employers who have been trained in phishing prevention may fall victim to these more sophisticated approaches.
In 2019, Toyota experienced a major breach as a result of social engineering, which involved criminals convincing a financial executive at the firm to alter account information on an electronic transfer, leading to a loss of $37 million. As explained in a report, attackers may research their victims for months beforehand, in order to gather enough background information in order to be convincing.
Account Takeover And Credit Card Fraud
With this customer data increasingly being sold on the black market, your customers run the risk of account takeover fraud, where criminals can use a customer’s e-wallet or mine the account for further personal information. If a criminal gains access to a customer’s credit card information, they can then attempt credit card fraud. Similarly fraudsters can use stolen information to engage in identity theft, which involves creating new accounts with you while pretending to be their victim.
Using stolen sensitive customer data (particularly credit card information), criminals can attempt to make transactions on your site – if you don’t have any preventative measures in place. This can lead to costly chargebacks when your customers look to claim money back on fraudulent transactions that they didn’t make.
How Much Does E-Commerce Fraud Cost Merchants?
Merchants globally have a revenue loss of 3.6% due to fraud. When a victim claims their money back, this has two implications for merchants – they lose the sale revenue as well as have to pay chargeback fees, which usually range between $5 and $100. If your business is having to deal with multiple chargebacks due to criminals being able to make transactions on your site, this quickly adds up and can become costly to your business.
They also discovered that thanks to security requirements in the EU such as Strong Customer Authentication (SCA), card-not-present fraud (or fraud where a criminal attempts to use a stolen credit card to make a purchase) has dropped by 28% in EU countries. However, any transactions outside of the EU that do not use SCA measures are still at increased risk of fraud.
Not only does this have financial implications, but it can also be damaging to your reputation among customers, which again in turn can impact your sales and customer loyalty.
Security Measures To Combat Rising E-Commerce Fraud
In this next section, we’ll explore practical insights on implementing security measures, enhancing customer trust, protecting brand reputation, and staying compliant with regulations. The article also touches on the challenges and considerations involved while emphasizing the importance of continuous monitoring and adaptation to safeguard online transactions effectively. Finally, we glimpse into future security trends that could further empower online businesses in the evolving digital ecosystem.
According to SEON’s article on ecommerce fraud, one of the best ways to prevent card-not-present fraud – or transaction fraud as it is otherwise known – is by collecting as much data on customers as is possible (while also respecting data privacy laws). Usually you’ll start by collecting primary data such as IP address, phone number, email address, customer name, and credit card information. But as SEON explains, by enriching some of this primary data such as a phone number or email address, you can gather additional data which helps fill in some of the gaps in your dataset.
By gathering additional information on a customer such as whether their phone or email address is connected to a long history of social media accounts, for example, you can find out whether the user’s internet presence is suspiciously limited. Customers with a limited social media presence are much likely to be suspicious, and therefore flagged by fraud prevention tools that utilize data enrichment. Other useful information that enables you to flag a user as suspicious include whether their IP address is from a country or location which is commonly associated with fraudulent activity, or whether the phone number is disposable.
You can use data enrichment alongside other strategies like user behavior monitoring or behavior analysis. Red flags for suspicious user behavior include using an emulator or virtual machine, several customers all using the same IP address or hundreds of login attempts targeted at a specific account. You may also find that a customer’s email address or phone number is already on a blacklist, meaning that it’s a good idea to block that customer from your site immediately, as well as any accounts they may attempt to create in the future.
Fraud detection tools that use AI machine learning can help you to stay up-to-date with the latest criminal tactics and behaviors (while also helping you to remain compliant with changing regulations). By feeding a machine learning tool large datasets that contain information on fraudulent and non-fraudulent customer activity, you can speed up your detection of criminals with the help of more efficient parameters, as well as help your tool to make better decisions based on future customer behavior.
One huge benefit to your legitimate customers of using data enrichment and behavior analysis, is that it doesn’t increase friction in the shopping experience. It means that not every customer who uses your service has to undergo an identity verification check – only customers you’ve deemed as suspicious have to experience more thorough checks to make sure they are who they claim to be. As a company, balancing light and heavy Know Your Customer (KYC) checks, as limited KYC will make your site more vulnerable to attacks. However, a pre-KYC check that utilises data enrichment and user monitoring can mean that you don’t have to use KYC as often, and only when you see it’s necessary.
Encrypting Customer Data
Another way to protect your customers from having their data exploited by criminals is to ensure that you use data encryption on their sensitive information. By making data like credit card information, transaction history, and bank details unreadable to criminals, you’re also helping to safeguard them against attacks if there has been a data breach.
By implementing advanced security measures, like encryption, multi-factor authentication, and AI-driven threat detection, e-commerce sites can safeguard online transactions against various fraud types, including identity theft and payment fraud. Implementing these security solutions means that businesses can protect themselves from financial losses and maintain customer trust in the face of evolving e-commerce fraud threats.
Ankita Tripathy loves to write about food and the Hallyu Wave in particular. During her free time, she enjoys looking at the sky or reading books while sipping a cup of hot coffee. Her favourite niches are food, music, lifestyle, travel, and Korean Pop music and drama.