e-payment fraud

E-commerce has been significantly growing— even more so by the COVID-19 pandemic. Alternatively, however, this also led to an equivalent increase of fraudulent activities worldwide. One of the most notable is the rise of e-payment fraud.

Vesta, leading fraud detection solution company, emphasized that e-payment fraud causes negative ripple effects within the e-commerce industry. Featuring Vesta General Manager in Asia Pacific, Shabab Muhaddes, here are the details at length about e-payment fraud.

So, what is e-payment fraud?

As the term suggests, e-payment fraud is an online transaction done in any fabricated or illegal methods. A user paying his or her products online through a stolen credit card is an example of e-payment fraud.

According to Shabab Muhaddes, it comes in various ways:

  • Card testing: also referred to as card cracking, is when a criminal will make a small purchase on a stolen or purchased credit card number.
  • Chargebacks: There are two kinds of chargebacks. One is Criminal Fraud, which occurs when bad actors use stolen information (e.g. card numbers) to purchase goods and services fraudulently. And the other is Friendly Fraud, which occurs when a customer makes a legitimate purchase but doesn’t recognize the charge on their bank statement.
  • Account takeover fraud: is a form of identity theft that occurs when a cybercriminal gains access to someone’s private account and personal information (e.g. phishing, using purchased stolen credentials)

This act seriously harms both the victimized customers and businesses, especially the small and medium enterprises (SMEs). It not only cheats out of the victim’s payable funds or property, but it also cheats out of SMEs.

“Fraud attacks on your system are a relatively easy way to damage consumer trust and brand reputation if businesses show their buyers that their payment options are not secure,” explained Muhaddes.

Why do e-payment frauds keep on happening?

The reason why e-payment fraud is on the rise is simply that it’s profitable. Fraudsters come up with tactics and techniques that are ever-evolving, which makes it even more challenging for online retailers to maintain or better their digital presence.

“It is no longer practical to rely on manual intervention and rule-based technology to catch fraudulent transactions as the thresholds for fraudulent behavior keep changing. Those who are not putting advanced systems and technologies in place to fight fraud are particularly vulnerable to increased fraud attacks and false declines,” explained Muhaddes.

6 red flags of e-payment fraud

With that being said, Muhaddes provided tell-tale signs to point it out and prevent SMEs from being victimized:

  • The IP address for the device from which the purchase is made doesn’t match the payment’s billing address.
  • An unusual email address is associated with the order – this is often a series of random letters and numbers rather than an easy-to-remember email address that the average person would use.
  • Requests to expedite the order, which is a common tactic for attempting to bypass transaction verification protocols.
  • Multiple transactions over a short period.
  • Several transactions on one card, but with a different shipping address for each order.
  • Several cards are used to place multiple orders from a single IP address

Additionally, Muhaddes advises retailers to put guardrails in place to verify the customer’s identity.

“Expanding into the Philippines, we remain committed to enabling growth while managing risks for the region’s businesses and their revenues,” concluded Muhaddes.

About Shabab Muhaddes

An accomplished professional with international experience in the payment and banking industry, Shabab has over 15 years of extensive knowledge of payments (10 years in Asia) at both Visa and MasterCard, across multiple functions and senior leadership positions in Sales, Product and General Management. He was recently appointed as the General Manager of Vesta, a global leader in digital fraud prevention and approval enhancement solutions, overseeing their geographic expansion across Asia Pacific.

About Vesta

Vesta is an established global leader in fraud prevention for online purchases. Using machine learning backed by 25 years of transactional data history, Vesta increases approvals of legitimate sales for its customers, while eliminating chargebacks and other forms of digital fraud.


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