In the e-commerce world, there are three common types of fraud:
- First Party Fraud
- Third Party Fraud
- Seller Fraud
First Party Fraud
This is when the customer is legitimately trying to scam you. In e-commerce this might be:
- Claiming a product wasn’t delivered
- Reading a book and requesting a refund
- Claiming they didn’t make the charge on the credit card
What makes this difficult to combat is that it may be seasonal; recession time sees an increase in first party fraud, for example. A once loyal customer now can’t afford the life they’ve been accustomed to, this is why it is also known as “Friendly Fraud”.
Third Party Fraud
This occurs when someone other than the real account holder commits fraud. This is often bundled in with Identity Theft in the mainstream news. Third party theft includes:
- Credit card fraud
- Account takeover
- Identity theft
Seller fraud is more prevalent on auction sites but still occurs when websites allow third party or affiliate sellers such as “new and used” sections.
The seller will deceive the buyer either by shipping nothing or sending below par, not as described goods.