Fraud is a constant challenge for anyone involved in eCommerce today. Customers, sellers, and especially platform owners are all targets of fraudsters and experience some form of fraud on a daily basis. eCommerce fraud has existed since the inception of online selling, but post-pandemic, it has grown exponentially with no signs of slowing down. A study from ‘Juniper Research’ has revealed that the value of eCommerce fraud will rise from $44.3 billion in 2024 to $107 billion in 2029; a growth of 141%. With fraud so prevalent, eCommerce platforms have to be more vigilant than ever, proactively implementing effective defenses to secure online transactions and user experience.

This article explores the landscape of eCommerce fraud, highlights the need for fraud detection in eCommerce, and outlines some of the best tools available to help digital platforms prepare and protect themselves against online fraud.

Fraud Detection in eCommerce

Fraud detection in eCommerce has become a basic need for platforms to survive in this digital age. 

Why?

It takes years for an eCommerce platform to build its reputation—getting thousands of products listed by hundreds of merchants and attracting a loyal audience that shops regularly. Then comes a fraud incident—like payment fraud or an account takeover—that shakes the very foundation of trust between shoppers and sellers in a matter of minutes. By the time platforms begin strategizing for damage control, the damage is already done.

The money lost by sellers or customers due to a fraudulent order is just the beginning.  Exploding Topics reveals that, every $100 in fraudulent orders results in $207 in total losses comprising of wholesale costs, shipping and fulfillment costs, along with chargeback and processing fees—more than double the original amount. And that’s still not the end. The real cost also includes lost trust and damaged reputation, which impacts future sales in ways that can't always be measured.

This is how big of an impact fraud creates on an eCommerce platform.

Major types of fraud prevalent in eCommerce:

1. Payment fraud - fraudsters execute transactions using stolen credit card information usually conducted in one of two ways—card-not-present (CNP) fraud or card-present fraud.

2. Promo & referral abuse - fraudsters exploit referral or promo codes meant for new users by creating multiple fake accounts on the same device to use the same code multiple times.

3. Triangulation fraud - fraudsters set up fake stores offering deep discounts, then fulfill orders using stolen credit cards on legitimate eCommerce sites—leaving the real business with chargebacks while pocketing the customer’s payment.

4. Gift card testing fraud - fraudsters buy and resell eGift cards for cash using stolen credit cards and the eCommerce platform has to refund the amount to the card company, leading to losses.

5. Friendly fraud - fraudsters try to make genuine claims when it isn’t, such as trying to get a refund by claiming a product was never delivered or that it didn’t match the product description.

6. Flash sale abuse fraud - fraudsters try to use bots to buy items during seasonal sales in bulk and resell them on other platforms at higher prices.

7. Card testing fraud - fraudsters test stolen credit card details by making small purchases on eCommerce platforms before launching larger fraud attempts, causing inventory loss, chargebacks, and damage to brand reputation.

The presence of any of these fraud builds growth challenges for businesses.  To avoid the fraud on eCommerce platforms, strong fraud prevention solutions should be at the top of every eCommerce platforms’ priority list.

What Does An Ideal Fraud Prevention Solution for eCommerce Must Have?

• Real-time threat analysis

• Risk scoring levels for each device

• Continuous improvement through machine learning and AI

• Behavioral analysis

• Location analysis

• Easy integration

• Centralized user interface

By incorporating fraud prevention measures with the above features, platforms can effectively combat the ever-changing landscape of fraud threats.

What are the Best Fraud Detection Tools Available for eCommerce?

Best Fraud Detection Tools

Here is a list of the best fraud detection tools for eCommerce 

SHIELD:

SHIELD is a device-first fraud intelligence platform that helps digital businesses worldwide eliminate fake accounts and stop all fraudulent activity. Powered by SHIELD AI, this tool identifies the root of fraud with the global standard for device identification (SHIELD Device ID) and actionable fraud intelligence, empowering businesses to stay ahead of new and unknown fraud threats. SHIELD’s Device ID uniquely identifies devices across app and web platforms with over 99.9% accuracy - even after advanced manipulation. 

This fraud detection tool integrates in minutes and proactively detects fraudulent activity with continuous session monitoring and identify red flags like GPS spoofing, emulators, app cloning without friction making it efficient for eCommerce platform. 

The solution is trusted by global eCommerce unicorns like ScaleFast, Meesho, Alibaba, HappyFresh, and more. With the world-class device intelligence solutions, SHIELD is eliminating unfairness to enable trust in the world.

Kount:

Kount offers fraud management, identity verification, and online authentication technology for digital businesses, online merchants, and payment service providers.

It uses data-driven decisions, advanced machine learning, and decades of experience to overcome the challenges that commonly plague today’s growing businesses.

Fingerprint:

Fingerprint is a real-time device intelligence platform that helps e-commerce retailers identify fraudsters in their online stores. Fingerprint uses device fingerprinting, machine learning, risk assessment, smart signals, and mobile app traffic intelligence for fraud detection on digital platforms.

SEON:

SEON is a fraud and risk prevention platform, catching fraud before it happens at any point across the customer journey. Through a single API call, the service aims to enable faster onboarding and integration.

Data Dome:

DataDome protects businesses from cyberfraud and bot attacks in real time, securing digital experiences across websites, mobile apps, ads, and APIs. DataDome boasts transparent insights, easy deployment, and 50+ integrations.

Conclusion

With fraud being so prevalent, every eCommerce platform owner must assess their current fraud risk and take proactive steps by implementing the best fraud detection tools to protect their business.