1st June, 2022
Shoppers like to pay via methods that facilitate a single login rather than entering data again and again. In this context, the popularity of PayPal, as a universally accepted payment method, can’t be ignored.
At the same time, the issue of fraud associated with PayPal too needs to be handled with aplomb.
Fraud detection and protection against scams and fraud attempts need to be tackled. Few months ago, the company admitted that the team had identified 4.5 million accounts that it believed “were illegitimately created”.
According to a poll conducted during Loyalty Security Alliance’s webinar this week, 50% indicated that they witnessed an increase in PayPal fraud since the start of the pandemic. Among the others, 35% opted for the “don’t know” option and remaining mentioned “no”.
Types of PayPal fraud
Speaking about PayPal fraud, Alphacomm’s Lisa de Vreede referred to account takeovers (ATO), friendly fraud, fake accounts and so on. Lisa mentioned that fraudsters are “smarter” than ever, and it can be seen in the way they behave to escape anomaly detection. So it could be observed in their timing – the day of the week, rather than accessing an account multiple times in a short duration spreading it over a period of time to not get caught etc.
Lisa admitted that friendly fraud is hard to detect, and it is vital to look at “patterns” to look for indicators. She also spoke about shipping address and fake email scams.
Another one that has been reported is related to overpaying the seller, and then seeking the overpaid amount from the seller. Also, a complaint is registered with PayPal claiming that their account was compromised and that they never meant to complete a transaction in the first place. PayPal repays the entire original payment back to the fraudster.
Sellers are also a victim of phishing scams. In this case, according to PayPal, phishing messages often begin with impersonal greetings. “Dear user” or “Hello, PayPal member” are definitely suspect.
The checklist for preventing fraud must include keeping an eye on overnight shipping for an expensive order, a request coming in to change the shipping address after the order has been paid for, spotting a high-risk location, an abnormally large number of international orders within a short time, a new customer places a larger than average order etc.
Alphacomm’s Jari van Dijk highlighted the issues faced by merchants – the instances where they have been “disconnected” by PayPal, fraudsters find a way to commit fraud etc. Merchants must keep a vigil on the continued acceleration of fintech fraud. Lisa stated that the fraudulent activity is “huge and being witnessed in everything that is e-money.”
By Ritesh Gupta, Ai Events
