How to Protect Against S-Commerce Fraud

Retailers need to keep on top of the latest trends to stay relevant in an ever-changing business climate. The information technology revolution has led to many changes in the way consumers buy products, resulting in a scramble among retailers to move from an on-premises sales model to one that features, either partially or solely, online purchases.

Another trend powered by the digital revolution is the rise of what is known as s-commerce, otherwise known as shopping on a social media platform. Retailers rushing to take advantage of this new avenue for selling their goods should also be aware of the potential for fraudulent activity it brings. As more and more consumers make or initiate purchases on social media platforms, the motivation for fraudsters to aim their activities at these platforms grows as well.

While merchants have typically had time to fortify their websites against fraudulent activity, they don’t have the same level of control over transactions that take place over social media, making it a challenge to prevent fraud originating from these platforms.

Characteristics of s-commerce

S-commerce can be considered a type of ecommerce, given that it involves digital transactions. As social media platforms like Facebook, Instagram, and Twitter have grown in prominence, users spend more and more time on these sites. This has motivated these platforms to offer transaction functionality, especially as major brands increasingly use social media to promote their brands and products and communicate with customers.

For merchants, the ability to get feedback from and engage with consumers is a big part of the attraction of social media. These sites can be used to gauge the popularity of their products and to source suggestions for improvements to their offerings. Likes and social shares offer handy metrics for gauging the viability of products and marketing initiatives.

Social media also makes it easy to personalize content for users, a feature expected by many consumers in today’s digital marketplace. A customized experience helps make the customer journey more rewarding and can help boost loyalty. The information about individuals available via social media makes it easy to personalize a company’s services to everyone. Unfortunately, access to a person’s information can also make it easier for fraudsters on social media to advance their nefarious schemes.

Types of s-commerce fraud

Along with the benefits of social media commerce come potential downsides as well. Hackers and other criminals go where the opportunity is, and many of them have found that social media offers a number of ways to commit fraud.

These include:

• Phishing: Fraudsters uses phony emails or communications over social media to trick a social media user into providing their login credentials.
• Fake profiles: By pretending to be someone they’re not, fraudsters hope to gain access to unwarranted benefits and information.
• Account takeovers: Once they have gained account credential information, either by phishing or guessing password info based on information provided on social media, fraudsters can attempt to use this access to purchase goods fraudulently.
• Credit card fraud: Access to social media accounts can enable fraudsters to gain access to linked credit card credentials.
• Merchant fraud: Fraudsters may pose as a merchant or use a merchant account they have gained access to in order to make fraudulent orders.

The integration of messaging functions into social media makes it easy for fraudsters to contact potential victims. When they gain access to an account, the wealth of data available to them enables fraudsters to engage in activities that can generate chargebacks once a credit card holder realizes their account has been hijacked.

As a merchant, it can sometimes be difficult to link chargebacks back to social media fraud, making it hard to know whether a chargeback is truly a result of fraudulent activity.

Because s-commerce, in most cases, ultimately brings customers back to the merchant’s website to complete a transaction, it is important for a merchant to be able to track transactions originating on social media to their source to fight this type of fraud.

Ways to Stop s-commerce fraud

One reason s-commerce fraud can be hard for merchants to prevent is that a large part of the transaction occurs on a platform they don’t control, even if the final part of the purchase is run through them. While you can secure your website with robust measures such as two-factor authentication or password strength measures, if a customer’s account is compromised on social media, these measures may not be sufficient to prevent fraud.

The following approaches can be used to help combat social media fraud:

• To reduce fraud due to hijacked social media credentials, one step you can take is to stress to your customers that they should never give their login or other personal data out over social media, and that you will never ask them for this information.
• To protect against s-commerce fraud, it’s important to evaluate your chargebacks to determine to what extent they are due to social media activity. If you notice an uptick in chargebacks from this source, it makes sense to exert extra effort to educate your staff and customers on ways to prevent fraud on social media.
• Customer service via social media can help you more easily reach customers and warn them of the dangers presented by scammers. Customers who are unlikely to read warnings about fraud on your website may be more easily be reached via social media. Additionally, by enabling you to reach the portion of your customer base that uses social media, this approach has the benefit of allowing you to resolve issues that might otherwise lead to chargebacks before they get to that stage.
• Another line of defense against chargebacks from social media is to use these sources to help fight “friendly fraud,” where a customer purchases an item and then falsely claims they never received it. If you can show via photos or comments on social media that the customer in fact received the item, it can help you win a reversal through the chargeback representment process.

Conclusion

While social media offers exciting opportunities for merchants to expand their audience and sell more products, these platforms also raise the risk of fraudulent transactions. You don’t have to withdraw from social media entirely to reduce the risk of chargebacks from this source. Instead, through extra staff training, proactive customer outreach and the help of a chargeback management services company, you can take steps to protect yourself from fraudulent transactions originating on social media.