Online Fraud – Helping you stay protected
12th February 2021

What are the different types of fraud that UK merchants and shoppers experience and how are they able to veer clear of these? In this article, our experts outline some tips to help you create an untroubled shopping experience and keep your information hidden from scammers...

What does it look?

“We are contacting you to let you know that you have recently been part of an accident and are entitled to £2000 in compensation. Please follow these steps to claim your compensation (including filling out your credit card details)” – Have you ever received an email like this?

Every day, thousands of emails like this, are sent to people across the UK, in an attempt to commit online fraud. During the COVID-19 lockdown alone, the Crime Survey for England and Wales reported that 16,000 people across the UK, aged between 18 to 26, have become a victim of online fraud.

With the number of online shoppers increasing exponentially, this has opened the doors for con artists to work their magic. Read on to gain a better picture of the types of online fraud and how you as a merchant can protect yourself.


Phishing, derived from the term fishing and how a fisherman throws out his bait to pluck his 200kg Atlantic Bluefin Tuna, is a method of trying to gather personal information through using deceptive emails or phone calls from companies you may know and trust. This sophisticated form of online fraud swindles you into believing the message is something that you desire, in turn, initiating you into providing your personal information to these cyber attackers.

Friendly fraud

A chargeback, which is a reversal of a credit card transaction, favours the consumer and exists to give buyers protection from businesses who might sell goods or services which are found to be sub-par. There are multiple forms of chargebacks; including True Fraud (unauthorised use of someone’s credit card), Chargeback Fraud (an attempt by the consumer to avoid payment of the good or service which they have ordered), and Friendly Fraud (which occurs when the consumer issues a chargeback due to common, honest errors).

Friendly Fraud can occur for multiple reasons including lost items, being charged the incorrect amount, part of the order is missing, or even making an order under the influence. For example, the customer orders a pair of trainers from yourself, and has them delivered to the address of their choice. The delivery man then delivers them but does not ask for a signature. The customer then emails to claim that they never received the package and the merchant believes this, sending them another package for free.

However, as a merchant there are several ways to reduce chargebacks and cases of friendly fraud. The first method is to have a clear exchange or refunds policy stated on your website so when a dispute occurs, you can instruct your customer to follow your code of policy. With fast and friendly customer service, you can build an honest business which is less likely to encounter friendly fraud, compared to a business which does not treat their customers with a degree of respect. Finally, the merchant must have a comprehensible payment descriptor or a label for customers to clearly identify their purchase. This is important as customers often look through their bank statements and are unaware of the charges present and dispute the purchase.


Merchants sell through their E-Commerce platforms are susceptible to this form of online fraud. For an overpayment to occur, the merchant will sell a good with an agreed price, to which the scammer will pay an extra sum on top. The scammer will then create an excuse for paying the extra charge and demand a refund for the additional sum. The refund will be paid out to a third-party account, through an online banking system. But after the refund has been paid, to the scammer, their cheque bounces back and is invalid.

Due to the altering environment in which we live, this form of fraud has evolved through to PayPal as well as other online payment methods. The scammer’s are able to create fake PayPal receipts and claim the extra money they paid forward.

The best techniques used to avoid overpayments arising include creating secure payment methods. Avoid taking payments through mail order or wire transfer, as this invites the possibility of overpayments to occur. Instead set up payment methods that allow you to process transactions through your E-Commerce platform. At DNA Payments we can provide you with the best payment solutions for your website. Finally, always avoid accepting a cheque that does not contain the agreed price. Send the cheque back to the customer and never agree to repay the difference.

3D Secure

A method that is used to prevent online fraud is 3D Secure. The name 3D secure is derived from the fact that the app is completing a 3-dimensional level of security which will become verified by VISA and pass MasterCard secure code. This method will be known to many online shoppers when they are asked to insert their password that was set up with their issuing bank. This payment security is utilised to add an additional layer of authentication to a payment in a card not present environment. The merchant who is selling the good or service will take all of the risk of the payment unless 3D Secure is set up. When 3D secure is activated, it will shift a portion of the liability away from the merchant towards the issuing bank. With this level of security, customers are able to show trust in the merchant when completing an online transaction. Once the payment has been processed, you will not experience a chargeback.

Technology is a constant factor in everyone’s life and with the ever-growing innovations, scammers and fraudsters will always look for new opportunities. Therefore it is imperative for both businesses and consumers to be made aware of the world of online fraud.

Fortunately for you, that’s where we can help. Our various payment solutions enable you to accept payments safely and securely, instore, on the go, and digitally. Contact us to speak to a member of our team who will gladly advise you on any queries you may have regardingpayments.