ecommerce scams

As a result of COVID-19, 2020 has seen a boom in the number of consumers turning to e-commerce businesses.

Sadly, the rise in online shopping has also made way for an increase in fraudsters operating a variety of shipping scams, affecting both consumers and businesses alike.

We cover the most common shipping scams of 2020 and how they are impacting e-commerce profits.

What are the most common shipping scams?

Some of the most prevalent shipping fraud schemes to take place in 2020 are as follows:

Package rerouting fraud

Package rerouting usually occurs when a fraudster has purchased an item using a stolen credit card. The fraudster will make the payment using the actual card holder’s address so as not to alert the fraud filters. They will then change the address with either the merchant or courier once they have received the shipping confirmation.

Package rerouting is a problem not only for the legitimate cardholder but also for merchants who now have unaccounted for goods, which often results in businesses having to return funds to reimburse the genuine cardholder.

How to prevent package rerouting fraud

The initial response to combating package rerouting fraud is often to block the option of rerouting. That may not be the best course of action as there are many valid reasons as to why a legitimate customer may want to reroute their package. Some may wish to reroute to their work address, for example. Blocking the option to reroute can therefore provide a negative customer experience.

An alternative option is to re-examine the cases where a change in delivery address has been requested. Signs that the request could be fraudulent are if the new address is in a completely different part of the country and if the telephone area code number does not match up.

It’s also essential to ensure that you have good communication with your shipping company so that if the fraudster contacts them directly, you are alerted, and no rerouting request goes unnoticed.

Items not received

One of the most prevalent shipping scams are fraudsters who falsely claim that they have not received their items.

E-commerce businesses lose millions each year because of items not received claims due to how easy it is to conduct the scam. All the fraudster has to do is submit the request and, more often than not, businesses will send out a replacement item, losing out on revenue.

What’s worse is that once word gets out that a business readily ships out replacement items, whether it be through word of mouth or social media, many fraudsters will take advantage of the scam.

Many businesses are also reluctant to challenge items not received claims to avoid upsetting legitimate customers with genuine cases.

How to prevent items not received claims

The most important thing is to ensure that your company’s returns policy is as simple and straightforward as possible.

Whilst a clear returns policy does not entirely solve the problem, easy processes are more likely to deter consumers from cheating the system.

Other methods include catching customers on social media posting pictures of the product they said they didn’t receive, as well as customers signing for orders and still attempting to claim afterwards!

Hacked shipping accounts

Some fraudsters are bold enough to go a step further when it comes to shipping scams, with some even attempting to hack into business’ shipping accounts.

Fraudsters will use the stolen shipping account number to process large shipments similar to when making orders via a stolen credit card.

The severity of these orders can vary, with some scammers using the opportunity to process personal deliveries whilst some have been known to ship large quantities of drugs across the country.

Once again, this fraudulent activity means company profits can massively take a hit.

How to prevent hacked shipping accounts

To prevent the likelihood of scammers gaining access to your business’ shipping account, ensure that the details are only shared with limited and reliable members of staff. Perhaps introduce a reporting system where the verified members can make shipping arrangements without the need for continuous authorisation.

Shipping fraud can be a severe threat to e-commerce businesses both in terms of profits and reputation. Whilst it’s not always easy to stop fraudsters in their tracks, companies must be vigilant and introduce the necessary steps to prevent the likelihood of shipping scams from taking place.

If you’d like to know more about how your business can ship products more efficiently, speak to Pointbid. We’re a third-party logistics provider, with over 50 years’ experience, who can ensure that your entire order fulfilment process is managed quickly and accurately. Please give us a call on 0121 326 7368.

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