E-commerce scams surge, businesses urged to be vigilant

While companies are getting accustomed to transacting and conducting business online, there has been a proportional rise in e-commerce scams targeting vulnerable businesses, warns the risk management department at First National Bank (FNB).

These types of fraudulent scams usually involve a business-to-business (B2B) operator, manufacturer or a supplier claiming to provide lucrative goods and services at competitive or massively discounted prices. Scammers use this strategy to lure businesses into paying upfront, but with no intention to deliver.

“As much as digitisation drives efficiencies and streamlines processes, digitisation also presents massive opportunities for cybercriminals to exploit online retailers, businesses and shoppers who are not vigilant to these threats,” says Roshan Jelal, head of commercial risk at FNB.

One of the preventative measures that companies can apply to protect themselves from e-commerce cybercriminals is by conducting a background check on the ‘supplier’ or ‘manufacturer’ prior to making an upfront payment for the goods or services. According to FNB, payment should only be made once there is certainty that the business is dealing with a reputable supplier.

Jelal urges businesses to consider conducting the following prior checks when dealing with new suppliers/businesses online:

• Always take time to conduct thorough independent verification and research into the supplier/other party.
• Popular products and services sold at attractive/significantly cheaper prices should be seen as alarm bells.
• Obtain references/reviews from organisations that have previously conducted business with these suppliers.
• Check complaints forums such as Hellopeter or social media platforms such as Facebook and Twitter for negative posts relating to the supplier. Moreover, test whether the company has a LinkedIn profile which may include information on associated staff members.
• It may be prudent to use search engines such as Google Maps or Street View to test the legitimacy of a supplier’s physical address.
• Verify supplier phone number(s) and email address(es). It may also be worthwhile checking whether the supplier URL accords with the email address.
• It is advisable, especially for once-off payments, for businesses to use the ‘Verify owner’ function on their online banking platform to ensure the supplier’s name accords with the account number provided. Customers who suspect fraud should contact the bank immediately.

Moreover, businesses are advised to refrain from exposing their bank card details, sensitive personal information and emails to possible e-commerce cybercriminals as this can potentially expose them to future risk.

Read: Possibly the worst attempt to scam people ever

“Banks have developed and deployed measures to monitor transactions and behavioural models in an effort to proactively identify spurious transactions and will continue to innovate in terms of changing modus operandi,” says Jelal.

“However, these measures and models will be more effective if businesses remain alert, protect [their information], and continuously educate themselves given the constantly evolving fraud landscape.”

Palesa Mofokeng is a Moneyweb intern.