Fraud Expert Shares Why Basic Fraud Prevention Isn’t Enough for eCommerce

Hidden in the shadowy corners of the internet and the bustling activity of financial institutions, scammers tirelessly innovate new ways to exploit the vulnerable. From elaborate phishing emails to high-stakes bank fraud, the tactics are as diverse as they are damaging. If there’s one common thread, Jamie McKeon, fraud expert and a Strategic Fraud Operations Specialist at NoFraud, has noticed it’s that scammers are constantly finding ways to target vulnerable victims.

Previously a bank teller and later a private client banker, Jamie found the fraud aspect of banking particularly intriguing, which drew her to her current position. At NoFraud, she focuses on tailoring fraud prevention solutions for new merchants and closely monitors existing accounts to detect any emerging fraud patterns. Her work involves adjusting logical frameworks to better identify fraudulent transactions and working directly with merchants to understand and solve their specific security challenges. Being on the front lines, Jamie is privy to the latest trends and tactics fraudsters are attempting.

In this article, Jamie shares real-life scammer stories and what she’s learned merchants need to do to keep their business running seamlessly.

Prior to NoFraud, Jamie saw her fair share of fraud attempts in the banking industry, from fake checks to more elaborate schemes. “We actually had a guy that would stand outside and offer money to college students to run into the bank and cash fake checks. He ended up getting arrested,” Jamie recalls.

Some of the more heartbreaking cases involved taking advantage of elderly victims. Jamie remembers a case when, “This guy came in with an older gentleman, and he was trying to convince the gentleman to withdraw all of his money and give it to him. It was really, really sad to see because the older gentleman was just not with it enough to know that he shouldn’t be giving away all of his money. We ended up not withdrawing the money.”

And in another noteworthy incident, Jamie saw the workings of an inside job. “A customer came in to withdraw his entire balance, but I saw that his profile was just recently updated in the system earlier that day. When I asked for his ID, it showed he was 75 years old, but the guy in front of me was clearly much younger.” Jamie points out that the recent update to the victim’s profile was likely an employee working with a fraudster to use a stolen identity. They targeted an elderly victim’s account in an effort to clear out his life’s savings. 

Ultimately, Jamie declined that withdrawal as well. “Cases like this have always interested me, and that’s why I decided to join NoFraud — to focus on fighting fraud on behalf of merchants.” These experiences underscore the importance of vigilance and sophisticated fraud detection systems and fraudsters’ wild attempts to target unsuspecting — and often vulnerable — victims.

From Vulnerable Customers to Vulnerable Merchants

At NoFraud, Jamie helps optimize eCommerce fraud operations by proactively identifying system vulnerabilities merchants might not be aware of. Here’s her advice to merchants.

Tailored Fraud Prevention Solutions Make the Defense

“Fraud prevention is a game of proactivity.”

No two eCommerce businesses are the same. From customer buying patterns to average order value and the systems that keep the engine running, the mechanics of each shop differ — and so do their needs. “While we use a web of data points like card information, billing and shipping details, customer email addresses, IP addresses, and third-party data to screen orders, fraud prevention is a game of proactivity,” Jamie shares on NoFaud’s approach. To really get ahead of fraudsters, merchants need to be analyzing their end-to-end eCommerce operations. “The backend setup is really where all the vulnerabilities lie, and that’s what I focus on,” says Jamie. 

“Out-of-the-box solutions aren’t always the best for merchants.”

Are your fraud filters too rigid? Are your systems talking to each, from checkout to fulfillment and beyond? “Out-of-the-box solutions aren’t always the best for merchants. They don’t catch everything, and most merchants need a fraud specialist who understands their business to spot vulnerabilities,” says Jamie. Jamie shares an example of a popular brand’s subscription setup that she recently improved, “We brought to light a problem that they never even knew they had. The subscription service they used was just not picking up on fraudulent orders.” 

Subscription and eCommerce platforms often have a fraud prevention component, but these are typically very basic filters that don’t catch the advanced tactics of today’s evolving schemes. And most of the time, they don’t integrate with other systems to pass the insights and data needed for detecting evolving fraud patterns. Fraudsters know this, and that’s why they target specific merchants when they know there’s a gap to exploit.

Here are some helpful resources on subscription fraud and subscription fraud trends.

Lean on Fraud Experts to Help Your Business Scale

“If [fraud starts] to take time away from activities that drive business growth, it’s time to call in expert help.”

Fraudsters often test system and operational gaps across businesses of varying sizes to see what they can get away with. They know that larger merchants are likely to have a solid infrastructure in place with a dedicated fraud detection system and team, and smaller merchants aren’t there yet. In both situations, fraudsters deploy a range of tactics because their methods are based on testing, learning, and adapting based on what works for their schemes.

The best practice for merchants of all shapes and sizes is to make fraud prevention a core part of your strategy. From inception to scale, it’s important to be aware of all the fraud hurdles you might come across as soon as you launch and throughout your growth journey. Smaller merchants might see more stolen credit cards in the infancy of their business because fraudsters know it’s likely the merchant doesn’t have a solution set up to flag these transactions. For larger merchants, fraudsters might lean on the company’s mature level of customer service to attempt more returns fraud.

Most merchants, however, are unaware of all the types of fraud that can happen until a problem has already occurred — after a fraudster has exploited a vulnerability. Jamie warns, “A single chargeback can be a sign of more to come, especially for new businesses.” 

Fraudsters might target smaller websites perceived to have weaker security measures, so it’s important to get ahead of any problems that can snowball into bigger headaches. Jamie adds, “If you’re managing fraud in-house or using a system that doesn’t seem to be catching everything — and it is starting to take time away from activities that drive business growth — it’s time to call in expert help.”

Take a Deeper Look at High-Value Orders

Jamie shares a mind-boggling case where a fraudster used seemingly legitimate information, including a stolen ID and additional verification pictures, to attempt a high-value watch purchase. The order was flagged for review by the NoFraud team, and a request was sent to the customer’s email for further verification.

“We received verification images and a driver’s license matching the customer’s details from the customer’s email address,” says Jamie. “Everything pointed to this order being legitimate, but when we called the phone number matching all the credentials, the guy who answered said he didn’t place the order.” This means the authentic customer’s email was hacked and his images were likely stored in his email, making it easy for the fraudster to access.

This case emphasizes the sophistication of fraudsters and the importance of having a robust detection system and a team of fraud experts who know how to effectively vet transactions. 

Speak with a fraud expert to learn more about the latest fraud trends, how NoFraud can help you grow, and to get an assessment of your business.