Online fraud is an inevitable risk for any e-commerce business. As your store grows, it becomes increasingly attractive to fraudsters. Understanding common fraud types and implementing preventive measures is essential to protect your revenue and reputation.
Types of online fraud
Online stores typically face several common types of fraud:
Friendly fraud
Friendly fraud occurs when a customer completes a legitimate purchase and later disputes the transaction (chargeback), claiming that:
the order was not received, or
the purchase was not authorized.
In many cases, this is done intentionally.
How to reduce risk:
Ensure your billing descriptor clearly reflects your business name so customers recognize charges. Сheck your store profile settings once again.
Use shipping methods with tracking and delivery confirmation.
Keep records of delivery as evidence in case of disputes.
Maintain clear and easily accessible store policies for shipping, returns, and refunds. Transparent policies help set customer expectations, reduce disputes, and serve as supporting evidence in chargeback cases.
Clean fraud
Clean fraud involves the use of stolen credit card data, where fraudsters attempt to bypass fraud detection systems by making transactions appear legitimate.
These transactions often:
pass standard verification checks
resemble normal customer behavior
How to reduce risk:
Monitor incoming orders for unusual patterns (e.g., high-value purchases, mismatched data).
Use fraud detection tools capable of identifying suspicious behavior.
Review transactions flagged as high risk before fulfillment.
X-Cart and X-Payments provide multiple tools to help reduce the risk of clean fraud. At the payment level, you can use supported payment gateways that offer built-in fraud protection features such as AVS (Address Verification System), CVV verification, and 3D Secure authentication. These mechanisms help validate transactions and reduce the likelihood of unauthorized card use. You can explore the payment options supported by X-Cart in the Payments section of the Knowledge Base.
In addition, X-Cart can be integrated with external fraud detection services that analyze transactions based on risk signals such as customer behavior, geolocation, and order patterns. You can also explore available integrations in the Services section of the Knowledge Base to extend your store’s fraud prevention capabilities.
Also, there's X-Cart's AntiFraud Service Connector add-on that can help with automated order risk assessment and decision-making.
Account takeover fraud
Account takeover occurs when a fraudster gains access to a user’s account and any kind of controls and sensitive information to which that account has access.
How to reduce risk:
Use multi-factor authentication for user accounts. Combining passwords with one-time codes or device-based verification significantly reduces the risk of unauthorized access.
Monitor login activity and detect unusual access patterns.
X-Cart supports 2-factor authentication for admin users. You can find out more on this topic in the X-Cart Two-Factor Authentication (2FA) Guide.
We also have the Google reCAPTCHA add-on that helps protect your store from automated fraud attempts by preventing bots from interacting with key storefront forms (such as registration, login, and checkout). By distinguishing between human users and automated scripts, it reduces the risk of scripted attacks, fake accounts, and bot-driven fraudulent transactions.