Learn how to identify and protect yourself from these online fraud scams.

ecommerce fraud, financeAs e-commerce continues to boom, online fraud is on the rise as well, with new risks appearing even as other online risks are receding. Here’s a look at the online fraud trends across 2017 and some insight into what to expect in 2018.

History has repeatedly shown that wherever fraud is made more difficult, tricksters simply turn to new avenues. 2018 will no doubt reflect history, and two points in particular should be kept in mind by online merchants.

CNP Fraudsters Will Up Their Game

Card not present (CNP) fraudsters are increasingly getting their act together, a matter of boosting efforts when well-trodden paths are blocked. For example, proxies are often used by criminals to hide activity but the flagging of proxies in fraud detection algorithms has prompted criminals to add increasingly complex tools in conjunction with proxies.

In fact, fraudsters in 2017 operated as an organized community with everything from prepared guides to seminars, and this pattern of self-organization will persist in 2018. As an example, there are numerous collaborative efforts to battle-test fraud prevention solutions in an attempt to circumvent fraud detection systems.

Only cutting-edge e-commerce fraud protection solutions, which include advanced features such as machine learning and the ability to link to data across social media and other third-party databases, will succeed in preventing fraudulent transactions.

Previously “Safe” Verticals Will Be Targeted

A common viewpoint on online fraud is that criminals will only commit fraud when the payoff is large. Exceptions are emerging though, in part thanks to the Dark Web. For example, credit card details are becoming very cheap to obtain, with stolen cards available for as little as $15.

The effect is that criminals use stolen cards to pay for basic living expenses, including ride hailing apps and online takeaways. The loss per incident may be low for the merchant, but a high number of small fraudulent transactions that get refunded can quickly eat into profits. Any product is now a target.

Travel services and airlines are also likely to continue to see a great deal of activity from fraudsters. The online travel industry has two characteristics which make their products targets.

  • First, transactions need to be completed quickly because prices on flights and accommodation can change rapidly. This limits the time that can be spent on vetting transactions, though a good fraud detection system is nearly instantaneous.
  • Second, relying on data mismatches to spot criminal activity is difficult because bookings are frequently paid for by one party and consumed by another. OTAs and other travel operators need to be vigilant.

The Bright Side: Some Risks Are Less Prevalent

As e-commerce evolves certain online fraud risks are becoming less prominent, it’s good news for e-commerce operators of all sizes. For example, premium shipping has always been a factor in evaluating fraud risk purely because fraudsters simply didn’t care about the additional shipping costs—after all, they are spending someone else’s money—and were prone to tack on premium shipping whenever they buy.

This is changing, however, as more and more customers demand premium shipping, Amazon-style. Therefore, merchants don’t need to worry as much as before about the sort of customers attracted to premium shipping.

E-commerce markets that are becoming more grown-up in nature also present a positive turn to online fraud risks. As Latin American e-commerce markets grow, the number of legitimate customers is increasingly outnumbering the fraudulent customers.

It can be argued that there will be solid growth in Latin American markets as the financial markets in Latin American countries become more mature: only 30 percent of Brazilians over 15 have credit cards, for example, and this is bound to change. Merchants should not let the shady reputation of these markets put them off.

The Non-News of 2018: Cryptocurrencies

As much as cryptocurrencies have been big news throughout 2017, and will continue to be in 2018, cryptocurrency is not a big factor with regards to e-commerce fraud, and this is unlikely to change throughout 2018, for the following reasons.

First, only a very small slice of e-commerce operators offer cryptocurrency as a method of payment. Second, cryptocurrencies are in some respects inherently more secure than credit cards, and it is difficult to impersonate someone due to the nature of blockchains.

That said, cryptocurrencies are not a solution to CNP fraud, as cryptocurrencies have various issues that make them difficult for consumers to adopt. Consumers are aware that there is no regulation around these currencies, and they have no last resort when orders are not shipped, or in case of incorrect charges. Large-scale hacks and frauds put money at risk, so the average shopper will likely prefer a payment system built on fiat currency.

Selling Safely in 2018

Online merchants should remain vigilant against online fraud. From going to lengths to protect their websites and IT infrastructure through to vetting customers for fraudulent activity, online retailers should be tuned in to the risks criminals pose. Automated fraud detection and preventive measures against CNP fraud will, of course, be key to selling safely throughout 2018.


Debbie Fletcher is an enthusiastic, experienced writer who has written for a range of different magazines and news publications over the years. Graduating from City University London specializing in English Literature, Debbie’s passion for writing has since grown. She loves anything and everything technology, and exploring different cultures across the world.