Payment Fraud: What You Need to Know

Payment Fraud: What You Need to Know

These days, buying things through the internet is nothing new. While online purchases make things more convenient, it also makes consumers more vulnerable to payment fraud. Payment fraud is any kind of transaction that is false or illegal that is committed as a criminal act.

The perpetrator can take away money, property, information and other things through those acts. There are some things that you need to know about payment fraud so you can stay safe. And there are plenty of preventive measures you can take like the use of high-risk credit card processing and extensive training of employees for detecting possible fraudulent transactions.

What You Need to Know About Payment Fraud

Payment fraud can be characterized in three ways. Those are unauthorized transactions, lost merchandise, fraudulent refund requests. Because e-commerce transactions are reliant on online transactions to collect payment from customers, they are particularly prone to fraud.

The increased volume of transactions through the internet has also increased the incidents of fraudulent payment transactions. Criminals use several methods to perpetrate payment fraud. Those include the following:


Phishing is the practice of getting people to reveal their information to use that information later on for unauthorized transactions. Phishing is often done through websites and emails where people are asked to enter their details.

The email or the website is made to look like it came from a legitimate source so the victims would enter their information willingly. There are usually telltale signs that an email or a website is fraudulent. Often, the URL used for the website used by the criminals can be a clue, and for emails, the wording of the message is usually unprofessional.

Identity Theft

Identity theft is not just a digital problem. Whenever someone uses a different person’s identity to engage in transactions, whether those transactions are illegal or not, that is considered to be identity theft. Identity theft can be a serious problem for the person whose identity was stolen as it can leave him liable for the acts that were committed under his name.

Friendly Fraud

This type of fraud has a rather misleading name. Under this type of fraud, the perpetrator will purchase a product or a service using a credit card or a debit card. Once the product has been received, he will then initiate a charge-back. The usual claim is that card details have been stolen.

The aim is for them to keep the product purchased. This is usually done in high-risk businesses transactions.

Clean Fraud

person paying online

This requires more sophistication and know how to pull off. Under this fraud, an actual stolen credit card is used. Steps will be taken so that the means for detecting fraud are circumvented so that the transaction pushes through.

This fraud requires technical skill as well as knowledge about the owner of the card to fool the system into allowing the transaction to go through. Perpetrators usually run test purchases for small items online to test if the details are clear.

Unfortunately, there will always be unscrupulous individuals who will try to pull off some kind of fraud. You have to protect your business in some way against them.