Online fraud is increasing, with fraudsters constantly inventing more sophisticated schemes. As a result, e-commerce merchants have to be more vigilant than ever, proactively implementing effective defenses to secure online transactions. The consequences of lax defenses can be significant — not just major financial losses, but also the loss of customer trust and damage to their hard-earned reputations. 

This is why strong fraud prevention solutions should be at the top of every online merchant’s priorities list. 

Below, we’ll discuss which types of fraud online merchants are most vulnerable to and highlight what key features to look for when choosing e-commerce fraud prevention software. We’ll also review the best software e-commerce businesses can use to secure their online transactions.   

Notable types of e-commerce fraud to detect and prevent 

There are many types of fraud, but there are a few that are particularly relevant to e-commerce that businesses should strive to detect and prevent:

Payment fraud

Payment fraud occurs when a fraudster steals credit card information and uses it to purchase a product or service from an e-commerce store. To avoid detection, the fraudster may send the products to reshippers or use a residential proxy to mask their identity.

Account takeover (ATO)

In an account takeover, the fraudster gains access to a legitimate user’s account and either transfers loyalty points to another account or purchases products. These criminals often use the following techniques to access accounts:

• Phishing for personally identifiable information (PII) or login details
• Credential stuffing
• Buying credentials on the dark web

Often, customers save their preferred payment method for more convenient transactions — however, that makes it just as easy for cybercriminals to defraud them. 

You might think not saving a payment method offers more account protection, however, that’s also not ideal: Manually entering payment increases the likelihood of exposing sensitive information to phishing attacks, making it easy for criminals to bypass basic fraud prevention measures and access customer accounts. 

Friendly fraud

Friendly fraud occurs when a customer disputes a purchase made using their card, initiating a chargeback process for any of the following reasons: 

• Accidental or innocent requests: A cardholder doesn’t recognize purchases from their credit card, often because a family member or friend used it without informing them.
• Opportunistic friendly fraud: A customer can weaponize refunds simply because they feel buyer’s remorse or disapprove of a store policy.
• Chargeback fraud or malicious friendly fraud: A malicious customer intentionally requests a chargeback, claiming they didn’t receive a package or that the product is defective. 

Key features to look for in e-commerce fraud prevention software

There are plenty of fraud prevention solutions on the market that target different types of fraud. However, there are a few features that e-commerce businesses should prioritize:

Device intelligence and browser fingerprinting

Device intelligence involves collecting device (software and hardware) information, analyzing it, and generating a fingerprint (unique characteristics) to identify a device when it connects to the internet. Device intelligence uses device and browser fingerprinting and other methods like VPN detection, incognito mode detection, and IP geolocation.

E-commerce traders can use device intelligence to help identify and prevent fraud attacks, such as fake account creation, ATOs, promo abuse, trial misuse, phishing, and social engineering. 

When a user logs in, fingerprinting technology compares the stored unique characteristics to those of the user’s device. If the device exhibits any inconsistencies indicative of fraud attempts, the system detects and flags it as potentially fraudulent activity.

Bot detection

Fraud prevention software should prevent malicious bots from launching mass fraud attacks. If not detected in time, automated bots could launch large-scale fraud attacks. 

Bots can mimic normal user behaviors. Therefore, it’s especially important to have e-commerce fraud prevention software with robust mechanisms for identifying and blocking malicious bot activity to maintain your store’s integrity.

Machine learning

Machine learning adapts algorithms to changing environments, constantly enhancing their accuracy. 

Over time, machine learning algorithms using past legal transactions and fraud patterns learn to distinguish between legitimate and illegitimate transactions. It identifies contradictory behavior patterns, flagging such anomalies as potentially fraudulent activity. 

Chargeback protection

Chargeback protection shifts the liability of illegal transactions and payment disputes from e-commerce stores to chargeback protection service providers. The service involves automated transaction inspection and uses risk models and real-time analysis to accept or reject transactions based on their risk level. 

So, in the event of a dispute, you won’t suffer losses from chargeback fees and conditional refunds. Because the chargeback protection provider has a chargeback guarantee, you get reimbursed. In some cases, they may fight the dispute charges on your behalf and pay you back any revenue lost to fraud. 

Chargeback protection helps e-commerce stores smoothen their dispute management process, reduce the risk of illegitimate chargeback requests, and identify and prevent fraudulent transactions. This, in turn, reduces financial losses and helps maintain your financial health.

Behavior monitoring and risk scoring

An e-commerce fraud prevention software should monitor, analyze, and understand user behavior to help your store identify deviations from standard patterns. Upon detecting any deviations (like sudden differences in spending patterns, unusual login locations, or very high transaction amounts), behavioral analytics flag them as suspicious activities. 

Each action or event gets assigned a risk score based on transaction history, network connection, and user behavior. Using special techniques and mechanics (such as device intelligence and machine learning), the software can determine the probability of an action or event being fraudulent. 

This allows e-commerce stores to investigate transactions with a higher risk score and deal with the situation before it escalates into a serious threat. 

Alerts for identifying anomalies

Real-time anomaly notifications and alerts are crucial in identifying and reporting unusual user behavior that could be fraudulent. Anomaly alerts help prevent such activities before they escalate further. It increases security and reduces the impact on customers and e-commerce stores. 

The 8 best e-commerce fraud prevention software tools

Ready to implement stronger fraud prevention strategies for your e-commerce store? Here are eight leading choices to consider.

1. Fingerprint

Fingerprint is a highly accurate real-time device intelligence platform that helps e-commerce retailers identify fraudsters in their online stores. It spots malicious users and ends ATOs, prevents gift card and coupon abuse, helps cut down on CNP fraud chargebacks, and helps avoid merchant penalties. 

Fingerprint leverages the world’s most superior fingerprinting technology to assign visitors to an online store a stable visitor ID for precise and stable identification. It guarantees industry-leading accuracy at every user touch point. In addition to device fingerprinting, Fingerprint uses machine learning, risk assessment, smart signals, and mobile app traffic intelligence. Fingerprint also integrates seamlessly with e-commerce platforms, and you can customize it for advanced security and support. 

Pricing

Fingerprint has two payment plans: Pro Plus, which costs $99 per month, and Enterprise, a custom plan for which you must contact the sales team for more details. 

2. ClearScale

Clearscale supports e-commerce retailers with AWS cloud solutions. It helps e-commerce merchants drive sales and provide positive shopping experiences no matter where customers are located. With this tool, businesses can comfortably meet buyer demands throughout the entire customer journey. 

ClearScale’s comprehensive service offering worldwide makes it a viable e-commerce fraud prevention tool — especially for merchants with international customer bases.

Pricing

Pricing for ClearScale is only available upon request.

3. SEON

SEON is a full-featured data enrichment tool. Using email, phone, and IP address analysis, device fingerprinting, and machine learning, it powers fraud detection with data. It has modular APIs that provide the flexibility to use what you need.

SEON monitors transactions to detect and block suspicious transaction patterns. It can detect various types of payment fraud attempts. And its AML, API, and screening solutions mean better risk analysis, more data to work with, and a speedy onboarding experience. The software’s wide offering and ability to address specific needs make it a well-rounded fraud prevention tool. 

Pricing

SEON has a free plan that’s limited to two users. It also has a Starter plan for $599 a month and a Premium plan with custom pricing.   

4. Kount

Kount is an e-commerce fraud detection and prevention tool that ensures safe interactions. It utilizes machine learning and robust data collected from several industries to protect businesses against fraud threats. 

It helps businesses identify and resolve fraud payment issues and complaints quickly and even identifies and blocks known fraudsters on government watchlists. The software’s focus solely on retail e-commerce makes it suitable for e-commerce fraud prevention. 

Pricing

Kount has four pricing plans: 

• Essentials: $0.07 per transaction, available on Shopify and select e-commerce marketplaces
• Advanced: Starts at $1,000 per month
• Enterprise:  Custom solution, pricing only available via request.
• Custom: Custom solution, pricing only available via request.

5. Riskified

Riskified is an AI-powered fraud management and risk intelligence platform that helps eliminate risks and block threats, enabling merchants to maximize revenue and profit securely. 

It helps reduce and shift fraud chargeback liability and leverages machine learning, automation, and e-commerce expertise to grow approval rates. It also uses precise decisioning and data attributes to detect and block ATOs. 

Riskified strives to ensure customers can enjoy a positive customer experience while at the same time preventing refund, promo, and reseller abuse. The software’s ability to scale with a business makes it viable for growing e-commerce stores’ fraud protection.   

Pricing

Riskified’s pricing is only available by request.

6. Signifyd

Signifyd uses data analytics and machine learning to determine the risk of every transaction, helping e-commerce stores differentiate between legitimate and fraudulent customers. It analyzes various data points and provides risk scoring to help determine the likelihood of a transaction being fraudulent. 

The fact that it offers various security benefits to e-commerce stores of different sizes makes it a viable option for e-commerce fraud prevention.

Pricing

Signifyd’s pricing is available by request, and takes into account details like your current operating expenses, chargeback losses, and order declines.

7. Ravelin

Ravelin leverages device fingerprinting, behavioral analytics, and machine learning to help e-commerce stores identify and prevent fraudulent activities. It assigns each transaction a risk score and sends real-time alerts to help e-commerce stores swiftly determine the likeliness of fraud. 

The software also offers customizable risk thresholds to efficiently prevent fraudulent activities while providing a smooth user experience.

Pricing

Ravelin doesn’t charge a standard fee for their services. However, its pricing varies according to the volume of transactions and specific custom requests. 

8. Arkose Labs

Arkose Labs leverages adaptive authentication, risk assessment, and global threat intelligence to protect e-commerce stores from fraud. It uses interactive tests to challenge users during authentication, making it difficult for automated bots to gain access. 

Arkose Labs’ use of interactive challenges and machine learning helps improve security and prevent automated bots from gaining access, making it a viable fraud prevention option.

Pricing

Arkose Labs pricing is only available via request.

Elevate your fraud security with Fingerprint

Payment fraud, account takeover, and friendly fraud are the most common e-commerce fraud types to be vigilant against. And not just any software will effectively combat credit card fraud — you need a tool that uses device intelligence, browser fingerprinting, bot detection, machine learning, chargeback protection, behavior monitoring, and real-time anomaly notification. 

However, if extreme accuracy is what you want, Fingerprint is second to none in preventing fraudulent purchases, curbing coupon and promo abuse, and ensuring the safety of your customer accounts. 

Contact us today to elevate your fraud security with Fingerprint’s superior e-commerce fraud protection.