What Ecommerce Fraud Means for You: The Individual

This is the third article in our series on ecommerce fraud. Click here to read Part 1, for banks, and Part 2, for businesses.

Imagine you're scrolling through your favorite online store, adding a few items to your cart. Imagine the little thrill of excitement as you hit "checkout." You’re about to receive a box full of goodies, and all it took was a few clicks. Now imagine that instead of receiving your package, you end up dealing with fraudulent charges on your credit card. That’s the dark side of the convenience of ecommerce: when fraud strikes, everyone pays—especially you, the consumer.

We’ve discussed these staggering stats in this series’ previous articles: global ecommerce sales are set to hit $6.3 trillion in 2024, with cumulative losses between 2024 and 2027 alone potentially topping $343 billion. While banks and businesses suffer from ecommerce fraud, they often have entire departments, insurance policies, and security teams to fight back. You, on the other hand, have your wits, maybe a password manager, and a nagging feeling that your last purchase seemed a little too good to be true ($15 for a MacBook? Hmm…).

Recent statistics reveal that, over the past years, more than 70% of victims of online shopping scams ended up losing money. In the last of our 3-part series on ecommerce fraud, we’ll explore why and how this crime impacts the individual and how to be your own best advocate.

The Problem of Ecommerce Fraud for Individuals

Ecommerce fraud happens when cybercriminals steal your personal and financial information during an online transaction, then use your info to make purchases. Whether they’re conducting unauthorized transactions, stealing your identity, or setting up fake online stores to scam you out of your hard-earned cash, their goal is their own gain at your personal expense.

In the vast majority of cases, ecommerce fraud for consumers is inextricably linked with credit card use and Card-Not-Present (CNP) fraud, which occurs when payment card information is stolen and used for online transactions and other transactions where the physical card is not needed. In the US, CNP fraud has surged in direct relation to the increase in ecommerce sales. In other words, credit card fraud and ecommerce fraud go hand-in-hand.

And what’s driving the rise in fraud? For starters, more people are shopping online without knowing how to do it safely. Customers often aren’t paying close attention to where they’re entering their details, leaving the door wide open for hackers to slip in unnoticed. Plus, the very nature of ecommerce—making transactions available to anyone, anytime, anywhere—creates a perfect storm for fraud. The sheer volume of transactions, especially more risky ones like international orders, makes it easier for fraudsters to blend into the crowd and get away with it, too.

The Impact of Ecommerce Fraud on Individuals

There’s a reason why financial gurus tell individuals to use only credit cards, instead of debit cards, when shopping online. Credit cards boast zero liability policies… and most debit cards don’t. In the US, when ecommerce fraud strikes, credit card liability for consumers is often limited to $50. Debit card ecommerce fraud can leave the customer liable for much, much more. Add this to the fact that debit cards are often used by economically disadvantaged people, and you get serious financial harm to the most vulnerable among us. And while a zero-liability policy is nice to have, it doesn’t truly combat fraud.?

In 2022, the average loss per online purchase scam was $114. It starts with direct losses: your money vanishing into thin air as you stare at your financial statements. But it doesn’t end there. There are also indirect costs to consider, like overdraft fees if your account goes into the red because of fraudulent charges, or the legal expenses you might incur if you need to take action to recover your funds. Additionally, businesses’ fraud expenses may trickle down to you in the form of higher prices. Because they always do!

Ecommerce fraud doesn’t just drain your bank account. The stress and anxiety of dealing with fraud can seriously impact an individual’s quality of life. Imagine spending hours on the phone with your bank, filing police reports, and gathering evidence to prove that you didn’t make that $1,000 purchase in a country you’ve never even visited. Proving a transaction was fraudulent can be difficult, especially when dealing with anonymous cybercriminals operating from halfway around the world. And don’t forget: you also need to cancel and replace your compromised cards. That leaves you high and dry without a card until the new one comes in. You’ll also probably want to freeze your credit, making it a hassle to manage loans or open new accounts. Frustrated yet?

After a fraud event, consumers may never trust online shopping the way they once did, turning the convenience of ecommerce into a stressor in their lives. Then there are the long-term financial consequences. Your credit score could take a hit if fraud leads to missed payments or maxed-out credit limits. This can disrupt future purchasing and borrowing potential. And if your identity is stolen, you might find yourself fighting off fraudulent loans and credit card applications in your name for a long, long time.

Ecommerce fraud is also a big contributor to false declines. As companies desperately try to stem fraudulent card transactions, they sometimes put protection in place that mistakenly flags your normal online purchases as fraud. The approval rates of online transactions are around twelve percent lower than those of in-person transactions. There’s nothing more infuriating than your Google Flights Price Tracking finally alerting you to a great deal, you leaping into action to get the best rate on the vacation you’ve been planning for months… and your card being declined for no reason at all.

In short, the far-reaching effects of ecommerce fraud often come to rest squarely on the customer’s shoulders. Ecommerce fraud can not only deplete your finances but also leave lasting emotional, practical, and financial burdens that majorly disrupt your life.

Protecting Yourself Against Ecommerce Fraud

So, how can you protect yourself from becoming a victim of ecommerce fraud? The U.S. Federal Trade Commission (FTC) has some solid advice for staying safe while shopping online:

Learn About Sellers and Products

Before hitting "buy," do your homework. Research the seller, read reviews, and make sure the product isn’t too good to be true.

Pay by Credit Card When Possible

Credit cards offer better fraud protection than debit cards or digital payment tools like Venmo or PayPal. Plus, if something goes wrong, you can dispute the credit card charge.

Keep Records

Save your receipts, order confirmations, and any correspondence with the seller. If something goes wrong, you’ll need these documents to back up your claim.

Know What Personal Information the Site or App Collects

Be cautious about what you share online. If a site asks for too much information, it could be a red flag.

Report Problems

If you do get scammed, report it to the FTC or your local consumer protection agency.

For those who want an extra layer of protection, Ellipse Verification Code (EVC)?is a payment-card based solution that works by transforming your card’s ordinary printed security code into a dynamic code that changes whenever you choose, with a simple tap or dip at a payment terminal or with an app. When you, the cardholder, have control over your changing code, no fraudster can get your full card information. This means you can use your card for ecommerce transactions without fear. EVC is a card-based solution, which corresponds with the FTC’s guidelines for ecommerce safety, and also helps reduce false declines.

At the end of the day, staying aware and choosing good tools are essential steps to protecting yourself from ecommerce fraud. Whether you’re a seasoned online shopper or a casual browser, taking proactive steps to protect yourself can mean the difference between a convenient transaction and a modern nightmare.