Six Ecommerce Scams to Watch Out For

Buying goods online is now a part of many people’s daily lives. In fact, ecommerce sales accounted for 11.9% of all retail sales worldwide in 2018. Ecommerce usually works well for buyers and sellers. However, fraud schemes can make buying online dangerous, so prospective shoppers should always take precautions before completing a purchase.

Now that chip-enabled credit cards are making it harder for criminals to counterfeit cards and use them at point-of-sale terminals, fraudsters are increasingly targeting transactions made over the internet. While in-store fraud is down, card-not-present (CNP) fraud is on the rise. In 2017, nearly twice as many consumers had their cards misused in a CNP transaction as they did at a store.¹ 

When using your credit card or other payment method for online shopping, look out for these six ecommerce scams:

1. Fake Stores

A common tactic of scammers is to set up a fake online store that pretends to sell items, but really just steals personal information like credit card numbers. These sites may have deals that seem too good to be true (because they are). Typically, such sites aren't particularly well designed. Although this isn't always the case, a poorly designed site should be considered a warning sign. These sites may also use email addresses that don't include the company name and/or domains with less reputable extensions than dot-com.

AARP notes, "Some faux e-stores are invented from whole cloth, but many mimic trusted retailers, with familiar logos and slogans and a URL that’s easily mistaken for the real thing. They offer popular items at a fraction of the usual cost and promise perks like free shipping and overnight delivery, exploiting the premium online shoppers put on price and speed."²

2. Fake Apps

Sometimes these scams come in the form of apps rather than stores, but the same general principles apply. Pay attention to app store reviews and accounts, credentials, design, etc. Again, beware of deals that seem too good to be true, and never give your information to an app unless you’re certain that it’s on the level.

3. Reshipping Fraud

"Reshipping fraud is a relatively new scheme targeting businesses and credit card owners," Experian explains.3 "The scam begins when criminals buy high-dollar merchandise—such as computers, cameras, and other electronics—via the Internet using stolen credit cards. They then have the merchandise shipped to U.S.-based addresses of paid 'reshippers' (who may be unaware they are handling stolen goods). These reshippers repackage the merchandise and mail it to locations internationally where the items can be sold."

4. Identity Theft

Identity theft has plagued consumers for years, and ecommerce sites are often destinations where the thieves go to spend the money that isn't theirs. Keep your credit card in a safe place to decrease the chances that it can be physically stolen. Shred papers that have identifying info, and avoid giving out credit card info when it isn't necessary to make a purchase from a reputable business. Refrain from having it saved on sites you use because you never know when a site may become compromised.

5. The Account Takeover

Rather than simply stealing a consumer's credit card info, a criminal may obtain a person's log-in information to an online shopping site and use that to take over their account. If credit card info has been saved on the site, this can present an opportunity for the thief to make transactions in the user's name and change the shipping address to their own. Avoid saving your credit card on ecommerce sites to make it more difficult for someone to take over your account.

6. Phishing

Phishing is one of the most common internet scams, and one of the most well-known. That doesn't change the fact that it remains as prevalent as ever. In phishing, cyber-criminals send emails to consumers disguising themselves as legitimate companies that the consumer likely uses. They try to trick the user into clicking over to a fake version of the company's website to give up sensitive information, which can then be used for fraudulent activity.

Phishing is bigger than the ecommerce space, but often comes disguised as emails from ecommerce companies such as Amazon, eBay, Etsy, etc. The email may ask you to confirm whether you ordered a big-ticket item, or may claim that more information is needed to ship a recent purchase. Once you click on the embedded link, you’ll be asked to verify your identity by providing (surprise!) confidential information. Legitimate companies won't email you to ask you for sensitive data, so that's the first sign that you're dealing with a phishing scam. Always pay attention to the links inside emails. If you’re not 100% sure that the email is legitimate, go to the company’s website or call their customer service number. 

Help Protect Yourself

The takeaway here is that consumers must be vigilant in protecting their information, both online and off, to lessen their chances of falling victim to ecommerce fraud. Card alerts from your bank can be a useful tool, notifying you when your card is being used online. You can even sign up for mobile alerts, texts that are sent to your phone asking you to verify purchases. Nevada State Bank has more helpful information about how you can help protect yourself from fraud here.

1. https://www.experian.com/blogs/ask-experian/the-state-of-online-shopping-fraud/

2. https://www.aarp.org/money/scams-fraud/info-2019/online-shopping.html

3. https://www.experian.com/blogs/ask-experian/ecommerce-fraud-what-it-is-and-how-to-protect-yourself/

The information provided is presented for general informational purposes only and does not constitute tax, legal or business advice. Any views expressed in this article may not necessarily be those of Nevada State Bank, a division of Zions Bancorporation, N.A. Member FDIC