3 most common types of fraud that online merchants have faced

Estimated read time 3 min read

Online marketplaces are becoming the first priority of buyers these days. People are buying all types of items from online stores, let it be a grocery item or expensive designer ware or an electronic goods of worth thousands of dollars. 

The increase in the popularity of online stores has also increased the risk of fraud in those places. Fraudsters have also invented new ways to earn illicit money while sitting at the comfort of their homes. Credit card fraud in the UK have increased by 19% in 2018 as compared to 2017. 

3 most common ways of how online merchants are defrauded are:

  1. Credit card fraud
  2. B2B Fraud
  3. Data stealing fraud


  1. Credit card fraud:

Credit card fraud to e-commerce businesses in the UK increased by 27% in 2018 as compared to 2017. Victims of credit card fraud can mostly get a refund from the concerned parties, through legal channels but the merchant involved would bear the double loss, in the form of a product delivered to the fraudster and the refund to the original credit cardholder. 

There are many online companies that provide identity, document verification services around the globe. SaaS (Software as a Solution) products, can prevent credit card fraud in e-commerce, through different verification services, like ID verification, document verification, address verification, facial verification, geolocation verification, biometric verification and many more.


  1. B2B fraud:

This fraud is not very common or you can say that not very commonly tracked but it has also been practiced by the fraudsters in many countries. An individual pretends to be an authentic merchant but uses a stolen identity of a person to get money from the naive online merchant. 

The loss of the online merchant could be in various forms:

  • The criminal merchant might be a part of a terrorist organization and the victim merchant ends up providing money to the terrorist organization
  • The criminal merchant might provide damaged goods to the victim merchant who would lose his customer value by delivering those goods.
  • The criminal merchant might not provide the goods at all after getting the money, because many online places get the money first and deliver the goods later. 


  1. Data stealing:

Sometimes the fraudster goes one step ahead and steals the data of the online business’s customers. The confidential data like credit card PINs, names, addresses, account information, this data further used by the criminals to defraud other businesses or just the individuals. 

Target store lost millions of dollars in fraud of credit card credentials theft from its systems. Its customer value and profits took a dive in 2014 due to this scam. 

These are just a few examples of “the most common” online frauds. The fraudsters could harm online businesses in many ways by just stealing an identity, let it be the identity of an individual or a business. Just as the online merchants secure their market place from the malware they also need to secure and manage their customer base and their data. 


Sarah Cantley

Editorial Head at UK Blog for Business & Startup.

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