John Larsen, Storetasker [Guest Blog]
June 27, 2019
We all know that credit card fraud occurs fairly often, but just how often does it happen and how many people are impacted by it? According to fraud analytics firm Rippleshot, every dollar of fraud in 2018 cost banks and credit unions $2.92--a 9.3% increase over 2017. In 2018 there were a total of 209,000 breached credit card accounts. According the Javelin and Lexis Nexis’ research, between 2017 and 2018:
Of course card fraud can happen to other types of cards besides credit cards as well. Debit cards and pre-paid cards are also subject to high fraud rates. To give you a better picture of the extent of the damage caused by card fraud and the number of fraud victims each year, here is a graph.
According to cybersecurity software company Symantec, formjacking is the new get rich quick system for cybercriminals. In a formjacking attack, cybercriminals load malicious code onto retailers’ websites to steal shoppers credit card details. 4,800+ websites are compromised on average every month. Large and small to medium-sized businesses have been attacked, so it can happen to a small Shopify store as well.
Although credit card fraud is a booming business, there are some steps you can take in your everyday life as a precaution against cybercrime. Apparently, Visa and Mastercard are working on next-generation credit card security. In the not too distant future, biometric cards will use your fingerprint to verify transactions. However, since those cards are not available yet and could take a while, here are some helpful tips for keeping credit card information safe.
The first one is don’t complete transactions on open networks. If your data is not encrypted, and the WiFi network you are using does not require a password, your data can potentially be visible to any nearby computer as well. Make sure that the websites you are visiting have https in the URL just to be safe. Basically, you never want to enter your credit card number or any other valuable information when you are using an unsecured, public Wifi network. Don’t email your card number or read it aloud in a place where other people can potentially hear it. Hackers use search tools that scan for numbers that are likely to be credit card numbers. Also, definitely don’t post photos of your credit card. Some people think that if they post a photo but erase the first eight digits of the card, they will be fine. This is not true. Someone can still discover what the card number is if they have the rest of the information.
So what should you do to avoid credit card fraud? Well, to start, if your card offers additional protections to online shoppers, sign up for them. Mastercard Secure Code will ask you for a six digit code whenever you make a purchase. Do you use Visa? Use Visa Secure. The next one seems obvious, but you should always review your credit card transactions. If you use online banking, you can see the entire history of your transactions so that you can spot any purchases that you don’t recognize and alert someone from your bank or credit union. Another step you can take to avoid credit card fraud is to shred all documents that are from your bank, including credit card transaction lists, bills, loan offers etc. Just recycling them is not enough. They must be shredded so that none of your numbers can be identified.
According to the Nilson Report, a payment industry newsletter, in 2017 merchants, merchant acquirers, and ATM acquirers incurred $7.28 billion in fraud losses worldwide, or 30% of the total amount. This means that not only does credit card fraud negatively impact your business from the fact that you are likely to lose customers if they do not trust your site to keep them safe from fraudulent activity, but merchants incurred a large portion of the total amount of credit card fraud losses. So if your ecommerce store is a victim of formjacking for example, you will not only lose money when shoppers on your site realize that their credit card information has been stolen by cybercriminals and stop shopping there, you will also likely lose money due to being forced to incur some of the fraud losses that customers experienced due to shopping at your store.
Also, the United States accounted for $9.37 billion in fraud which equaled 38.6% of gross card fraud losses worldwide. As the second largest ecommerce market in the world, the high numbers of fraud in the U.S. are particularly concerning for that industry.
So what can ecommerce businesses do to protect Shoppers and themselves from credit card fraud? It starts with the basics. With so many apps and third party vendors offering products and software that integrates with Shopify to help you attract and retain customers, sometimes it’s difficult to know which ones to use. To start, you can help to protect your customers by using services that take security seriously. Are you interested in offering a gift card option to your customers as a way of retaining current customers and attracting new shoppers who may not have heard of your store yet? This type of program can help you sell more products at larger dollar amounts. What if an exceptionally large gift card purchase was made from your store. Wouldn’t that be wonderful!? But what if you later discovered that the gift card was purchased with a stolen credit card and you are expected to refund the money and accept the income loss.
Other forms of gift card fraud involve taking advantage of data breaches with leaked gift card numbers, using the auto-load on Gift Cards to access customers’ bank accounts and jumping on programming loopholes to load more money than actually paid for. However, rise.ai uses an innovative fraud protection system that is designed to recognize fraudulent purchasing patterns. Services like this can help you to offer more to shoppers while avoiding any of the potentially negative effects that can come with offering additional options. There are a number of additional apps and services that you can integrate with your ecommerce store that use advanced security systems, you just have to do the research to find out which ones.
Another way to prevent card fraud on your store is by being careful who you allow to access it. There are so many tasks and skills required to successfully run an ecommerce store; so many that sometimes it becomes too much for one person to handle. So if you are thinking of hiring help for you store, don’t hire the wrong person from the wrong place. Many people claiming to be Shopify experts or experts in other ecommerce platforms are not, and some may be cyber criminals looking for an open invite to load malicious code onto your website to steal your customers credit card information. Don’t give them access by offering them a job. Instead, if you plan to hire help for your ecommerce store, hire a vetted expert from a trusted company like Storetasker. It’s never a bad idea to be extra careful when it comes to your business.
Now that you know just how many people are impacted every year by credit card fraud and other types of card fraud, don’t let yourself become part of next year’s statistics. Follow the tips for credit card fraud prevention and you will also prevent yourself from losing money and customers!