What is online payment fraud?
Online payment fraud refers to any financial transaction carried out using false or stolen payment information. It aims to obtain money or goods without authorization by exploiting sensitive data.
It manifests itself in several forms :
- Bank card data theft
- Bank account compromise
- Using stolen identities to validate transactions
This type of fraud relies on the theft of confidential information and the making of unauthorized payments.
The different types of online payment fraud
Fraudsters use several techniques to commit payment fraud. Here are the most common methods.
Phishing
Phishing is a social engineering attack that aims to manipulate users into revealing sensitive information. Fraudsters use emails, text messages, or fraudulent websites to steal login credentials or banking information.
- Emails that mimic a bank or a recognized merchant.
- Messages prompting users to update their account or verify a transaction.
- Links leading to a counterfeit website that collects the entered information.
- Variants via SMS (smishing) or social media (pharming).
These attacks rely on credible, often urgent messages that push internet users to act quickly.
How to protect yourself from phishing?
To prevent phishing attacks on your e-commerce, it is essential to systematically check the origin of received messages (CMS, payment solutions, plugin or other partners) and to check each link before clicking, favoring direct access to sensitive interfaces.
It is also important to raise awareness among your support, logistics and customer service teams about warning signs so they can quickly detect any attempted fraud.
Implementing two-factor authentication for administrator access and limiting internal rights helps reduce exposure in the event of a breach.
Finally, it is recommended to monitor unusual connections to your back office, to use up-to-date security solutions and antivirus software on all workstations, and to regularly test your processes to identify and correct any potential vulnerabilities.
These best practices against phishing apply to both professionals and individuals.
Identity theft
In the context of payment fraud, identity theft involves using someone’s personal information, such as their name or bank details, to make unauthorized purchases or open accounts in their name. This type of fraud can have significant financial and legal consequences.
Identity theft methods include :
- Data theft via phishing attacks
- Large-scale corporate database breaches
- Theft of mail, wallets or handbags
These frauds rely on the exploitation of credible personal data, allowing fraudsters to act quickly and often undetectably.
How to protect yourself from identity theft ?
To prevent identity theft on your e-commerce site, it’s essential to secure customer data using encryption and other protective measures against unauthorized access. Limit access to sensitive information to only those employees who need it, and enforce strong passwords and robust authentication for all accounts and administrative systems.
It is also crucial to train your teams in good security practices. Regularly monitor customer accounts to detect any suspicious activity, such as unusual logins or changes to information.
Finally, choose effective fraud detection tools and prepare a data breach response plan, including informing customers.
Payment dispute fraud
Payment dispute fraud occurs when a customer disputes a legitimate transaction, claiming they did not make the purchase or did not receive the product or service paid for.
In some cases, the customer may receive a refund while retaining the product or service, resulting in a financial loss for the company.
This type of online payment fraud can have significant consequences, such as loss of sales revenue and the application of fees or penalties related to payment disputes.
The most common methods include :
- Making a legitimate purchase and then disputing the payment by claiming the item was not as described or was never received.
- Using a stolen credit card to make a purchase, then disputing the transaction as unauthorized.
These frauds rely on disputes after the transaction, which can complicate the recovery of funds and generate additional costs for the company.
How to protect yourself from payment dispute fraud ?
To limit this risk, it is essential to verify the identity of the customer and to ensure that they are indeed the legitimate owner of the card used.
It is also important to have a clear policy regarding refunds and returns, as well as a structured process for handling disputes related to payment charges. Keep accurate records of all transactions, including receipts, shipping information, and communications with the customer, so you can provide evidence in the event of a dispute.
These good practices help to reduce losses and secure transactions, while maintaining customer confidence.
Reimbursement fraud
Refund fraud occurs when a customer attempts to obtain a refund abusively, by exploiting a company’s return or refund policies.
In some cases, the customer keeps the product while receiving the refund, or returns a different or damaged product to obtain an unjustified gain.
This type of online payment fraud results in direct financial losses for the company and can complicate inventory and financial management.
The most common methods include :
- Returning a used or damaged product while requesting a full refund
- Return of an item different from the one purchased
- Repeated exploitation of refund policies by the same customer
These frauds rely on the exploitation of refund processes and the trust placed in customers, which makes their detection more complex.
How to protect yourself from refund fraud ?
To prevent this type of fraud, it is important to implement clear and strict refund policies, with precise conditions for returns and exchanges. Always check returned products before issuing a refund, verifying their condition and that they match the original item.
Traceability is essential: keep detailed records of purchases, returns, and customer communications to justify your decisions in case of a dispute. Using fraud detection tools and analyzing suspicious behavior, such as frequent returns by the same customer, also helps to mitigate risks.
These best practices help secure your sales and reduce losses while maintaining efficient and reliable customer service.
Regulations: your ally against online payment fraud
The Payment Services Directive 2 (PSD2)
PSD2 is a European regulation that came into force to strengthen the security of online payments and protect consumers. It imposes strict requirements on payment providers and e-commerce businesses, with the aim of reducing the risk of online payment fraud while improving customer confidence.
One of the main pillars of PSD2 is Strong Customer Authentication (SCA). This measure requires merchants to verify the customer’s identity for each online payment by combining at least two of the following elements:
- A piece of knowledge: a password or code
- An item of possession: a mobile phone or a telephone line
- An inherent element: a fingerprint or facial recognition
The OSMP Plan
The Observatory for the Security of Means of Payment (OSMP) has developed a plan within the framework of the European harmonization of online payment security, provided for by the Payment Service Regulation (PSR) by 2027.
Anticipating these developments allows you to guarantee optimal compliance while improving the performance and reliability of your payments.
The plan includes the following obligations :
- Mandatory 3DS authentication : all online transactions must now be processed through 3D Secure (3DS) authentication, except in specific cases where exemptions are provided for by regulations. This measure strengthens payment security by verifying the cardholder’s identity.
- Merchant-initiated payments (MIT) : For recurring or scheduled payments initiated by the merchant, an initial customer-validated transaction (CIT) with strong customer authentication (SCA) is required. Each MIT payment must be linked to this initial transaction by a valid chaining reference.
- Direct-to-Authorization (DTA) Transactions : Transactions sent directly to the authorization system without strong authentication are now systematically declined. This prevents insecure payments and reduces the risk of online payment fraud.
- Elimination of exemptions : certain exceptions, such as the MOTO (Mail Order / Telephone Order) exemption, which previously allowed bypassing strong authentication, are being eliminated. All payments must now comply with SCA rules, even for orders placed by phone or email.
These changes aim to strengthen the security of online payments and significantly reduce online payment fraud, while harmonizing practices across Europe.
CentralPay: a compliant institution
CentralPay places compliance at the center of its various payment solutions.
As an electronic money institution authorized by the ACPR, the platform scrupulously complies with French and European requirements, including PSD2 and PCI-DSS standards for the processing of bank cards.
Each transaction is secured through data encryption, tokenization and strong authentication (3D Secure 2), guaranteeing both customer protection and legal compliance for e-commerce businesses.
This rigor allows companies to delegate compliance management to a reliable provider, while reducing the risks of online payment fraud and ensuring customer trust.
