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If you are reading this, probably you are a member of a company that uses e-commerce to sell its products, or you work in a FinTech/banking company, or maybe you are only a frequent user of these types of websites.

What do all these people have in common? They want that every transaction that they do through these websites or mobile apps is secured and not exposed to any kind of fraud. 

To do this, is important for those FinTech, banking, and e-commerce companies to fully understand how to prevent and detect fraud in their operations? Which kinds of frauds do exist? And what kind of tools are available to minimize the risk of being attacked by malicious people? 

All to prevent loss of clients and reputations while ensuring security and affordability

This post is going to present you with a set of tools to keep your sites and users safe and how you, as a user, can identify safe webs for your financial peace. But first, we have to take a closer look at what is fraud prevention, fraud detection, and kinds of fraud in our current digital era.  

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What is fraud prevention?

Fraud prevention could be defined as the implementation of strategies or mechanisms to prevent fraudulent transactions and prevent these actions from causing financial and reputational damage to financial institutions or customers.  

In a few words: fraud prevention occurs before the fraud attempt and its goal is to reduce the risk of future fraud operations.

To have a clear view of the problem of fraud in the digital sector here are some relevant statistics:

fraud prevention

To minimize this loss of money, reputation, and trust of the FinTech, banking, and e-commerce companies; fraud prevention, and fraud detection methods have to be continuously deployed to increase the security levels. 

Mechanisms that use machine learning and artificial intelligence algorithms, or other software are currently developed and implemented to protect businesses and customers from this.

However, it’s important to make clear that fraud prevention and fraud detections are two different sets of tools that companies exposed to digital fraud could implement. Companies can enforce the first ones or the second ones, or the two of them depending on which kind of fraud attempts are they most exposed to. The below image shows what are the main differences between fraud detection and prevention.

fraud prevention vs detection

Usually, when new customers are exposed to fraud in a website, they rarely come back and expend more money in this site. Because of these fraudulent practices, not only criminals are stealing from you, but they are wrecking your online reputation, damaging your brand, and hurting your profits.

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Types of fraud in e-commerce and the financial sector

Fraud in a digital era is not only stealing money through websites transactions, and is not only practiced by hackers, scammers, or online criminals, some unscrupulous customers use tactics such as friendly fraud (when users claim that the product wasn’t delivered), or refund abuse (when costumers return broken or damage products) to take advantage of your trust.

Taking into account that only visa process more than 29 million online transactions daily, there are plenty of chances for lawbreakers to intercept payments. Because of that, let’s take a look at the main 4 types of e-commerce fraud to which websites are exposed.

Card testing fraud

Card testing is the second most popular type of fraud in all sectors. This fraud is presented when scammers test if a stolen credit card works. Lawbreakers make small and low-value purchases to see if the transactions go under the radar of the cardholder. When they know that a card is still working, scammers make more expensive purchases.

Online payment fraud

Scammers duplicate versions of popular websites and make customers purchase items through fake sites. Hijackers take their cash and store their credit card number for future payments.


Phishing can be described as an account takeover that takes place when criminals break into an online account and use the store payment methods to make fraudulent purchases.

Triangulation fraud

This type of fraud has three main steps:

  • Create a fake online storefront to steal names, addresses, and credit card information (same as online payment fraud)
  • Scammers go and buy exactly what the victim purchased and ship it to the customer to prevent raising suspicious from the customer
  • Finally, lawbreakers use the stolen customer data to make additional online purchases that they ship to themselves

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What are fraud prevention methods?

There are different tools, mechanisms, methods, and fraud prevention solutions to address each one of the previously discussed types of fraud. 

It’s important that you select the ones that are closely related to solving the fraud that your e-commerce, FinTech, or banking company is suffering from. 

Here’s a selection of the most common practices:

  • Make an audit of your site security regularly.
  • Take extra cautions around peak shopping season.
  • Use Hypertext Transfer Protocol Secure (HTTPS) on your websites.
  • Make sure your e-commerce is PCI (Payment Card Industry) compliant. 
  • All purchases need Card Verification Value (CVV) numbers.
  • Set limits on purchases (value and items).
  • Check that the IP address and credit card address match.
  • Use customer verification software.


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How Truora can help you to prevent fraud in your services?

As you can see, many fraud types and prevention methods are closely related to an identity check.

According to Javelin Security and Research, criminals have stolen around $14.7 billion dollars in 2018, directly impacting 14.4 million consumers from identity fraud.


Fortunately, Truora has a repertoire of solutions to quickly and safely validate that your users are who they really are.

With Digital Identity by Truora, online businesses can verify if users are who they claim to be, using validations tools such as two-step authentication (2FA) via email or SMS, static or live biometrics, and document validations mechanisms. 

These methods could be implemented with a no-code flow builder and are thought to be easily implemented in your online business without disturbing the customers’ experience. These products are available via a hosted web experience, SDKs, APIs, or even through a Whatsapp chatbot to be closer to your users’ needs.

So, if you are being a victim of digital fraud and want to minimize the loss of profit or simply you want to protect your users and your reputation, Truora’s solutions Digital Identity and TruChecks services are here to help you in this endeavor.

Now that you know how to keep you and your customers safe, learn how to increase your business conversion rate securely.

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