Top E-commerce Fraud Prevention Tools in 2024

As e-commerce becomes increasingly popular, the risk of fraud is also on the rise. With more and more people shopping online, it’s becoming easier for fraudsters to take advantage of unsuspecting consumers. The anonymity of the internet makes it difficult to track down fraudulent activity, and many people are unaware of the risks involved.

Fraudsters are constantly devising new ways to steal from online businesses; one of the most common forms of e-commerce fraud is credit card fraud. Hackers can steal credit card information from online retailers and use it to make unauthorized purchases.

Another form of fraud is phishing, where criminals send emails or text messages posing as legitimate companies in order to steal personal information. making it important for ecommerce merchants to stay ahead of the game. With the rise in e-commerce frauds since 2020, it is now estimated that by 2024, e-commerce merchants may lose around $24 billion to online payments fraud. While e-commerce fraud increases are nothing new, bad actors are launching more sophisticated fraud attacks.

This is evident in the report published by the 2021 Statista survey involving online merchants across the world – where over 75% of participating merchants reported a net increase in fraud attempts since the beginning of the pandemic in 2020.

Fortunately, there are a number of fraud prevention tools available that can help protect your business and your customers.

Recognising ecommerce fraud and applying protection measures involves a 5-step analytical approach, which are:

• Pattern recognition
• Digital behavior
• Machine learning 
• Text analysis
• Visual analysis

Before we introduce the top ecommerce fraud protection tools, let’s talk about e-commerce fraud types and those signs you need to watch out for ecommerce related fraud.

10 eCommerce Fraud Types

1. Payments fraud

Payments fraud happens when dishonest people buy things with stolen credit cards and then resell them for a profit.

Transactions where the card is not physically present (CNP) are most vulnerable to this kind of fraud since the fraudster can make the purchase without having to show the card. Without taking proactive measures to prevent payment fraud, businesses run the danger of incurring losses from chargebacks, false positives, and operational inefficiencies.

2. Friendly fraud

When a customer makes an online purchase and then disputes the transaction with their bank, friendly fraud is set to have occurred. Chargebacks for the retailer are a common result of these conflicts.

Sometimes a customer willfully wants to contest the payment and keep the products or services. But more frequently, customers phone their banks or credit card issuers to challenge unauthorized payments.

Friendly fraud is typically not connected to criminal businesses, yet it can nonetheless hurt revenues and have an impact on stock. With a real-time chargeback prevention system, however, companies and merchants may stop friendly fraud, settle disputes, and prevent chargebacks.

3. Account takeover (ATO) fraud

Account takeover (ATO) fraud is a type of cybercrime that involves unauthorized access to a person’s or a company’s account. This type of fraud is becoming increasingly common in e-commerce due to the rise of digital transactions and the use of online platforms.

ATO fraudsters typically gain access to an account by using stolen login credentials, through phishing attacks, or by exploiting security vulnerabilities in the system. Once they gain access, they can steal sensitive information, make unauthorized transactions, or even lock the account owner out of their own account.

ATO fraud can have severe consequences for individuals and businesses, including financial loss, damage to reputation, and legal implications. It is essential to take steps to prevent ATO fraud, such as using strong passwords, enabling two-factor authentication, and regularly monitoring account activity. Without e-commerce fraud detection methods, this can lead to illegitimate purchases online and consequently loss of revenues.

4. New account opening (NAO) fraud

New account opening (NAO) fraud is a growing concern for ecommerce businesses and their customers. This type of fraud occurs when a criminal uses stolen or falsified personal information to open a new account in someone else’s name. 

The consequences of NAO fraud can be severe, both for the victim and the store owners. For the victim, it can result in damage to their credit score, identity theft, and financial losses. For the store owners, it can lead to reputational damage, regulatory fines, loss in revenues and loss of customer trust.

To combat NAO fraud, financial institutions are implementing various measures such as identity verification, biometric authentication, and fraud detection algorithms. Customers can also take steps to protect themselves by regularly monitoring their credit reports and being cautious with their personal information.

Without e-commerce fraud detection methods, this can lead to identity fraud and illegitimate purchases online.

5. E-gift card fraud

In e-gift card fraud, a criminal purchases an e-gift card using the victim’s credit card details. The bad guy may then resell the e-gift card online from there. The fraudulent party steals the consumer’s money and payment information and sells it to another consumer.

One common tactic is to use bots to quickly purchase large quantities of e-gift cards from a retailer’s website before the fraud is detected. The scammers then sell the cards on the black market or use them to make purchases before the card is reported stolen.

The original customer phones their credit card company to dispute the transaction while the bad actor who exploited their payment information to purchase the e-gift card does the same. The merchant receives a chargeback as a result of the dispute.

Consumers can protect themselves by being cautious when purchasing e-gift cards. Only buy from reputable retailers and avoid purchasing from third-party sellers or auction sites. Be wary of any offers that seem too good to be true, and always check your credit card statements for any unauthorized charges. 

6. Refund fraud

Refund fraud is a type of scam that involves obtaining money or goods through false claims of refunds. This type of fraud can occur in various forms, including online shopping, insurance claims, tax refunds, and credit card chargebacks.

Refund fraud can take many different forms, such as did-not-arrive (DNA), empty or mostly empty boxes, and fraudulent tracking ID. (FTID). Some dishonest individuals are a part of larger, more structured organizations that abuse return regulations or offer consumers refunding services.

In online shopping, refund fraudsters may claim that they did not receive the product or that it was damaged upon arrival. They may also claim that the product does not match the description or that they did not authorize the purchase. In insurance claims, fraudsters may exaggerate or falsify the extent of damages or injuries to receive a higher payout.

7. Subscription billing fraud

This type of fraud occurs when a customer signs up for a subscription service using fraudulent payment information or cancels the subscription after receiving goods or services without paying.

Subscription billing fraud can have a significant impact on a business’s bottom line, as it can result in lost revenue and increased chargeback fees. It can also damage a business’s reputation if customers are affected by the fraudulent activity.

To prevent subscription billing fraud, businesses should implement measures such as verifying payment information and monitoring customer behavior for suspicious activity. Additionally, businesses should have clear policies in place for handling chargebacks and cancellations.

8. Buy now, pay later (BNPL) fraud

By providing flexible payment alternatives, buy now, pay later (BNPL) models can assist clients in getting the goods and services they require right away.

Unfortunately, the more e-commerce companies that provide this option, the greater the options criminals have to do card testing and other scams. For new BNPL transactions and if consumers switch payment methods, a BNPL fraud solution helps lower the risks associated with card testing and other fraud.

10. Retail arbitrage fraud

Retail arbitrage fraud occurs when malicious bots enable one buyer to acquire a lot of cheap goods to resell on another marketplace.

This kind of fraud can swiftly reduce sales and earnings, deplete inventories, and snare customers who value discounts. Fraudulent retail arbitrage can lead to stark price discrepancies between marketplaces and subpar customer experiences, both of which can harm brands.

Because harmful bots are constantly changing, perimeter security, web application firewalls, and content delivery networks cannot effectively detect and block them. An effective bot defense tool can stop malicious activity and high-velocity attacks from bots.

12. Interception fraud

With interception fraud, bad actors attempt to intercept a customer’s order and obtain goods for resale. To do this, the bad actor will contact a vendor’s customer service partner to have the order’s shipping address changed to their own.

Interception fraud can be difficult to detect, as the fraudster may use sophisticated techniques to make their communication appear legitimate. It is important for both buyers and sellers to be vigilant and take steps to protect themselves against interception fraud.

One way to prevent interception fraud is to use secure communication channels, such as encrypted messaging or secure payment platforms. Buyers should also verify the legitimacy of the seller before sending payment, by checking their reputation and reviews.

10 Signs of eCommerce Fraud

The greatest strategy to prevent e-commerce fraud is to establish digital identity trust. Manual reviews won’t be sufficient as ecommerce online orders rise. However, there are 10 indicators of e-commerce fraud that all store owners and merchants should be aware of below:

1. Unusual purchase patterns – if a customer is buying multiple high-value items in quick succession, it could be a sign of fraud.
2. Shipping to a different address – if the shipping address is different from the billing address, it could be an indication of fraud.
3. Unusual payment methods – if a customer insists on using an unusual payment method, such as a wire transfer or PayPal, it could be a sign of fraud.
4. Multiple failed payment attempts – if a customer tries to make multiple failed payment attempts, it could be an indication of fraudulent activity.
5. Suspicious IP address – if the IP address of the customer is suspicious, such as being from a high-risk country, it could be a sign of fraud.
6. Unusual order quantities – if a customer is ordering unusually high quantities of items, it could be a sign of fraudulent activity.
7. Rushed delivery requests – if a customer requests rushed delivery, it could indicate that they are trying to receive the items before the fraud is detected.
8. Use of stolen credit cards – if the customer is using stolen credit card information, it is obviously fraudulent.
9. Unusual email addresses – if the customer’s email address is unusual or suspicious, it could be a sign of fraud.
10. Inconsistent information – if the customer’s information is inconsistent or doesn’t match up, it could be an indication of fraudulent activity.

By being aware of these 10 signs of e-commerce fraud, you can protect your business and your customers from potential harm. Always be vigilant and take appropriate measures to prevent fraudulent activity.

Below Are the Top E-commerce Fraud Protection Tools in 2023

1. Riskified 

Riskified is a fraud prevention tool that helps businesses reduce the risk of fraudulent transactions. It offers several features such as real-time fraud detection, chargeback protection, and order approval guarantees. 

One of the main benefits of using Riskified is that it can help businesses increase their revenue by reducing the number of false declines. This means that legitimate transactions are less likely to be rejected, which can result in lost sales. Additionally, Riskified can help businesses save time and money by automating the fraud detection process.

Riskified uses machine models to help ecommerce companies make informative decisions in mitigating a fraud attack by integrating user interaction and journey throughout their purchasing process.

Customers can easily get access to real-time insights on shoppers’ behavior, fraud trends, and payment issues, including a full suite of conversion-oriented tools, including a chargeback guarantee, policy protection, PSD2 optimization, Deco, and account security. 

2. ClearSale

ClearSale is a robust system designed to provide comprehensive protection against ecommerce fraud. With ClearSale, merchants can rest assured that their online transactions are secure and protected from fraudulent activities. Whether you’re a small business owner or a large enterprise, ClearSale offers a range of solutions to meet your specific needs. From real-time fraud analysis to chargeback management, ClearSale has everything you need to keep your online business safe and secure. So if you’re looking for a reliable and effective way to protect your ecommerce business, look no further than ClearSale.

ClearSale also offers a range of integrations with popular e-commerce platforms, including Bigcommerce, Magento, Vtex, Shopify, Prestashop, WooCommerce, Shift4Shop, Zoey, Volusion, and Salesforce. This allows businesses to seamlessly integrate ClearSale into their existing e-commerce workflows, making it easy to detect and prevent fraud without disrupting their operations.

In addition to these features and integrations, this fraud prevention tool also provides comprehensive support and training to help businesses get the most out of their fraud prevention efforts. With ClearSale, businesses can rest assured that they are protected against fraudulent transactions and can focus on growing their business with confidence.

3. Signifyd

Signifyd is a reliable provider of fraud protection solutions for businesses of all sizes. Their enterprise-grade platform offers advanced features and tools to prevent fraudulent activities and protect companies from financial losses. With Signifyd, businesses can detect and prevent fraud in real-time, reducing chargebacks, and improving customer satisfaction. Their solution is easy to integrate and provides businesses with a comprehensive view of their transactions, allowing them to make informed decisions and take action quickly. Signifyd’s team of experts is dedicated to helping businesses stay ahead of the curve when it comes to fraud prevention, providing unparalleled support and guidance. Whether you’re a small business or a large corporation, Signifyd’s fraud protection solutions can help you safeguard your business and your customers’ data.

Below are Signifyd main features:

• Interface – Signifyd offers a console that makes all transaction orders and reports easily accessible. Reporting gives merchants the micro and macro data they need to stay attuned to their business performance.
• Score – Each transaction is given a score that represents the order quality.
• Automation – When order fulfillment and cancellation become apparent, the tool enables back-office automation. Orders are decided in real-time by Signifyd, allowing you to automate fulfillment for legitimate customers while proactively blocking fraudsters.
• Team – Signifyd offers the choice of managing fraudulent activity internally or entrusting the management to the team at Signifyd.
• Chargeback – Payouts for chargeback insurance against fraud are completed in less than two days.
• API integration – Without changing the platform itself, Signifyd may be integrated with any ecommerce platform (or its API).
• Platform support – Shopify and Magento are two platforms that are supported.
• A free plan is offered.
• Pricing – Starting at 1% of your orders. They offer a free 14-day trial for testing the platform.

4. Subuno

Subuno is a customizable fraud prevention tool that can be tailored to your needs.

With its customizable features, Subuno can be tailored to suit the specific needs of any business. Whether you’re a small business owner or a large corporation, Subuno can help you detect and prevent fraud before it causes any damage. The platform is easy to use and integrates seamlessly with your existing systems, making it a hassle-free solution for fraud prevention. With Subuno, you can rest assured that your business is protected from fraudulent activities and that your customers’ data is safe and secure.

Once the orders are in Subuno, orders are checked against risk factors and business rules such as a fraud score, block/white lists, velocity, and order characteristics. You can customize your rules sets or use our best practice templates.

Subuno is appropriate for all sizes and types of retailers; it provides a comprehensive fraud prevention solution that flags suspicious orders, boosting sales (100 percent chargeback), and enhancing operational effectiveness. Below are the main features of Subuno:

• Automation: The 20+ fraud detection elements offered by the Subuno fraud protection tool assist in automating your fraud checks and provide a thorough overview of your order evaluations. 
• Customer data: The tool offers customer-specific information including location, contact information, and even the most recent time the email address was used. 
• Real-time insights interface: Each order is shown on the interface as a coloured pattern that can be utilized for verification.
• Built-in machine learning models: It supports complex algorithms that examine more than 100 factors to find fraudulent orders.
• Supported systems include, among others, Magento, PrestaShop, Shopify, and ZenCart.
• Pricing: Monthly rates begin at $19, no free plan is offered however, a 30 day free trial is available.

5. NoFraud

NoFraud is a cutting-edge ecommerce fraud prevention tool that is revolutionizing the way merchants and consumers conduct business online. The tool guards against a variety of fraud attempts, such as account takeovers, payment fraud, chargeback fraud, etc. NoFraud uses AI models in conjunction with proactive human inspection to produce precise pass or fail judgements.

Real-time order screening with a 100% financial guarantee against chargeback losses is what NoFraud advertises. One of NoFraud’s main advantages is its “Order Approval Rate,” which aids merchants in handling false positives and avoiding refusing legitimate orders. Additionally, the platform has a high-risk transaction level that ranges from low (the safest) to high. (riskiest).

NoFraud provides a comprehensive suite of tools and services to help merchants protect themselves from fraudulent transactions and chargebacks.

Another key feature of NoFraud is its advanced fraud detection technology. The tool uses machine learning algorithms and artificial intelligence to analyze transactions in real-time, identifying potential fraud before it can cause any damage. This allows merchants to quickly and easily block fraudulent transactions, protecting their bottom line and their reputation.

In addition to its powerful fraud detection capabilities, NoFraud also offers a range of other features designed to help merchants optimize their ecommerce operations. These include: 

• chargeback management tools,
• order verification services, and 
• customer support resources.

Your total monthly sales and average order value determines the pricing you will be charged. By using their online calculator, you can easily calculate how much you will be paying.

6. Forter

Forter uses an extensive record in its database to distinguish between legitimate consumers and fraudsters with prompt yes/no responses.

It is an automated solution that offers firms immediate approval or denial of each transaction. To prevent fraudsters from making purchases or committing other online crimes in real-time, Forter uses a comprehensive database of over 175 million identities. The platform makes use of this quickly expanding database together with predictive fraud modeling, research, and the capability for users to modify the software to meet their unique business needs.

Forter is a cloud-based fraud protection and prevention tool that offers different fraud prevention options for businesses of all sizes. Payment protection, intelligent routing for automated payment decisions, and policy abuse protection are some of these solutions. Forter’s solutions are a perfect fit for ecommerce business owners in a variety of industries, including retail, travel, and food & beverage.

• Block Bad Actors with Confidence – Reduce loss and chargebacks by making precise decisions about customer trustworthiness at checkout so you can stop fraudsters in their tracks.
• Eliminate False Declines – Assess trustworthiness instantly with 99% of decisions made in less than 400 milliseconds so you can approve far more genuine transactions from good customers.
• Support all payment methods – Instant approve/decline decisions on payment transactions, including credit, debit, and prepaid cards plus stored value payments, digital wallets, BNPL applications, bank redirects, bank transfers, and more.
• Guaranteed performance – Guaranteed results regarding fraud chargebacks, approval rates, and response time SLAs. Forter contractually guarantees both approval and chargeback rates so you can unlock better economics without needing to pay a premium for fraud insurance.
• Minimize Chargebacks – Fraud Management stops fraudsters in their tracks and significantly reduces chargebacks from the get-go by declining fraudulent attempts that would lead to chargebacks.
• Maximize Conversions – Fraud Management makes more accurate, real-time decisions to prevent false declines and approve more genuine customers.
  
  Payment Optimization leverages Forter’s partnerships to share insights that build trust with banks and card networks to increase authorization rates.

7. Kount

The Kount platform protects e-commerce from account takeovers, payment fraud, and account creation fraud using artificial intelligence. The AI-driven solution from Kount employs a model to assess each network contact and calculate the risk in order to predict how it will affect their customers’ businesses.

Omniscore is a transaction safety rating that Kount’s AI uses to evaluate each fraudulent behaviour. The omniscore is a number between 1 (unsafe) and 99 (safe). Customers can adjust a number of data points in their fraud prevention decisions using Kount’s flexible, hands-off customisation options to achieve their desired results. Over 9,000 customers use Kount across 75+ industry sectors and 250+ countries.

Kount is a well-known fraud protection tool that has a proven record across industries such as healthcare, electronics, and insurance, among others. 

The most extensive data network of signals relating to fraud and trust is Kount’s Identity Trust Global Network. Kount’s advanced artificial intelligence links global network data, creates identity trust, and generates a safety rating for each transaction using supervised and unsupervised machine learning. The tool;

• make precise identity and trust judgements.
• Block digital payments fraud and account takeover in real time.
• customize the consumer experience.
• Access information about payments, location IDs, and digital identifiers.
• Defend against both recent and historical fraud attacks.
• Increase the rate of order acceptance.
• Automate the acceptance and rejection processes.
• Create your own risk criteria to get the desired business results.

• performs fraudulent checks with the help of advanced technologies such as AI that allow easy identification of device ID, geolocation, and mobile signals of fraudsters. 
• Supports a single interface that displays all the necessary information of the users accessing the ecommerce store.
• Platform support: Kount supports Magento. 

Pricing: Pricing is decided based on transaction volume, however, the tool offers a free trial for testing purposes.

8. Shield

Shield is an online fraud protection and prevention tool that assists businesses in preventing hostile account takeovers and managing fraud. Throughout consumers’ visits to your online store, the platform does ongoing risk scans. It uses its 700 million accounts and 7 billion devices’ fraud libraries to shield your ecommerce store from fraud. This aids in your ability to foil fraudsters before they have a chance to act dishonestly.

Enterprise organizations can use the AI system provided by Shield, which blends neural networks and AI to help identify fraudulent assaults. Shield has the ability to identify fraudulent software at any step in your online store. To evaluate each client, device, and account of each customer or potential consumer, it makes use of device and network intelligence.

This eCommerce fraud protection tool offer:

• Incentive abuse and collusion prevention,
• Bot attack detection,
• Account sharing and subscription abuse management,
• Ad fraud detection,
• Payment fraud management, and
• Identity fraud detection.

Best Practices for eCommerce Fraud Detection and Control

The following industry best practices, whether employed independently or in conjunction with other behavioral indications, can aid in preventing e-commerce fraud.

1. Implement AI and machine learning.
2. Link fraud signals from a data network that’s larger than your own.
3. Implement risk-based or step-up authentication.
4. Implement card security code requirements.
5. Invest in Address Verification Services (AVS).
6. Partner with a reliable third-party payment processor.
7. Follow PCI standards.

Here are the top 5 FAQs on e-commerce fraud prevention tools:

1. What are e-commerce fraud protection tools?

E-commerce fraud protection tools are software solutions that help businesses detect and prevent fraudulent activities on their e-commerce platforms. These tools use advanced algorithms and machine learning to analyze data and identify patterns of fraudulent behavior.

2. How do e-commerce fraud protection tools work?

E-commerce fraud protection tools work by analyzing various data points such as IP addresses, device fingerprints, and transaction histories to identify suspicious activity. They use machine learning algorithms to detect patterns of fraudulent behavior and flag transactions that are likely to be fraudulent.

3. What are the benefits of using e-commerce fraud protection tools?

The benefits of using e-commerce fraud protection tools include reducing chargebacks, preventing losses due to fraudulent transactions, and improving overall customer trust in your business. These tools can also help you save time and resources by automating the fraud detection process.

4. What features should I look for in an e-commerce fraud protection tool?

When choosing an e-commerce fraud protection tool, you should look for features such as real-time monitoring, machine learning algorithms, chargeback prevention, and customizable rules. You should also consider the cost and ease of integration with your existing e-commerce platform.

5. How much do e-commerce fraud protection tools cost?

The cost of e-commerce fraud protection tools varies depending on the provider and the level of service you require. Most providers offer tiered pricing plans based on the number of transactions processed per month. Prices can range from a few hundred dollars per month to several thousand dollars per month for enterprise-level solutions.