4 Scams Online Merchants Should be Wary of in 2022

Even in 2022, there are plenty of people out there attempting to take advantage of countless online retailers.

The main issue here is that they are frequently small independent eCommerce merchants rather than large retailers who can potentially afford the loss caused by these scammers.

Here are a few of the most common scams that online merchants should be aware of in 2022.

Identify Theft

Identity theft is obviously one of the most common scams that you may encounter as an online retailer. Someone’s identity and credit card information have been stolen at some point, and the thief has either sold this information or is using it to buy a few select items online.

This should be avoided at all costs. You must also ensure that the information of any customers who have registered with you is secure. They will rely on you to protect their personal and financial information, so you must avoid the possibility of someone gaining access to their account and spending without their permission.

There are two options for avoiding this. To prevent hackers from targeting the information stored on your server, ensure that you have strong encryption and security protocols in place.

Hackers typically target smaller eCommerce businesses with the assumption that they have weaker security, so you must ensure that you do not provide them with the opportunity that they require.

You should also ensure that you have stringent KYC checks in place so that you can detect a fraudulent payment before it goes through.

Chargeback Fraud

Chargeback fraud is a type of fraud that has become increasingly common since the rise of eCommerce. It can take many forms, ranging from someone feeling guilty about a purchase to a system exploit. However, if your company has a policy that allows refunds or chargebacks, you should be aware of this type of fraud and how to combat it.

A genuine refund should always be issued, but you must exercise caution to ensure that the person receiving it is genuine. If there is a genuine issue on your part, you can expect a lot of refunds due to a canceled service or a faulty product.

If you are targeted by chargeback fraudsters, you will still have to issue a large number of refunds, and you may be even further out of pocket. You must also be careful not to sever ties with your payment partner, as they may begin to charge you for the extra processing, resulting in a strained relationship between the two of you.

Prevention is essential in this situation. Make sure you have a solid refund system in place and that all of your employees are well-versed in it. Prepare to offer store credit rather than a cash refund – this may deter fraudsters who prefer to see cash.

Wardrobing

This is a subset of chargeback fraud, but it is distinct enough that we thought it warranted its own section. The goal of traditional chargeback fraud is to get money back for an unused item or service, whereas wardrobing is slightly different.

This is the practice of purchasing a product, using it, and then attempting to return it while claiming that it was not used. It is most commonly encountered in the fashion industry. Do you have a big event coming up? You can’t just buy a dress, leave the tags on it, and return it the next day, can you? No, this is not the case, and it is a form of deception.

Though it is most prevalent in the fashion industry, it can also be found in the electronics industry. People can purchase a new camera for their holidays, or even a television to assist them in hosting a large sporting event. They don’t realize they can’t return their items in their original packaging.

In this case, do not provide a full refund. Because you won’t be able to sell the item at full price without the original packaging intact, offer a partial refund instead, and try to stick to offering store credit rather than a full refund.

Be Vigilant

As a small eCommerce merchant, you lack some of the major safeguards that larger corporations may have. This makes you more vulnerable to attacks from fraudsters who are unconcerned about your livelihood and only want to make a quick buck.

You must be able to detect fraudulent activity and act appropriately to stop the fraudster and potentially gather enough information to pass on to law enforcement.

Unfortunately, dealing with fraud is an unavoidable part of running your own business. One would think that when everything is done online, it would be easier, but this is not the case. No matter what, make sure that you keep your business safe.