Making and processing payments online is one of the most advantageous developments in e-commerce in recent years. They are a convenient means of payment that allows us to surpass geographical boundaries while costing us less time and energy. Be that as it may, online transfers come with their own fair share of issues and scams.
While there are different forms of online payment fraud, each scam has the same end goal: to rob you of your money and financial information. We’re sharing five of the most common online payment scams that the Financial Conduct Authority (FCA) is often warning us against, along with an effective method that facilitates your payments by bridging the gap between businesses and payment providers.
Stolen cards or card details
One of the most common types of scams any business might encounter is purchases made using stolen card details. A scammer might have picked up a lost card, or they might have electronically copied a person’s card details to make this payment. Once the payment is made, the business dispatches its products to the supposed customer, unaware that the purchase is unlawful.
If the original cardholder realizes that their card has been lost or stolen, they can immediately contact their card issuer to cancel their card. If the cardholder wins the dispute, the payment made by the fraudster posing as the customer will be cancelled. In this case, a business bears the entire burden of loss since it has to pay the costs of the original payment, the cost of goods provided to the customer, and possibly additional chargeback fees.
Another similar fraud that is not only limited to physical cards and card details is identity theft, also known as payment fraud. In this scam, imposters might use names, ID numbers, Social Security Number (SSN), user accounts, email addresses, and IP addresses to pose as someone completely different. With all this information, they can create fake accounts and profiles to make illegitimate payments online.
This type of online scam occurs when a customer makes an online purchase but disputes it by claiming that they never received the product or, if they did, it was damaged in transit. This can be accidental if the customer did not recognize a charge in their bank statement, or it can be a deliberate move made by scammers to get their products or services without having to pay for them.
Refunds using alternative methods
Another type of scam that the FCA has been warning the public against is alternative refunds. In these frauds, the scammer overpays on purpose so that they can complain to the business about accidentally having entered an incorrect sum. They then ask the business if they can get a partial refund to correct this mistake, claiming that the card used for that payment has been closed. Thus, the business will have to send the refund using an alternative method unrelated to the card, such as cheques or wire transfers. In this way, the business will lose both the amount that they will send a refund and the dispute fee that they will have to pay to the original cardholder.
An alternative form of the stolen card or stolen card details scam, this type of fraud occurs when a scammer poses as a customer in need of a third-party’s services during the purchase process. Next, they offer to pay an additional amount for the non-existent third-party along with paying for the original cost of the product. Therefore, the business ends up paying both this amount and the dispute fee to the original cardholder.
How to avoid online payment scams
While the situation might seem bleak to you since scams can often be hard to identify, there’s no need for you to fret. Allow us to introduce you to BridgerPay, a SaaS enterprise that facilitates online payments for e-commerce businesses by bringing traders and payment service providers together. BridgerPay has established a reliable channel that businesses can use for payment processing and for streamlining their financial activities. So head on over to the BridgerPay website and connect with a reputable and trusted payment service provider with just a few clicks!