A detailed study on fraud analysis of international trade on ecpommerce platforms

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A Project Report
On
Title: -A DETAILED STUDY ON FRAUD ANALYSIS OF
INTERNATIONAL TRADE ON ECOMMERCE PLATFORMS
Submitted By:
Name of the student: SMRITI TIKOO
Year: 2018-2020
Student no: 77217157576
Submitted To:
NMIMS GLOBAL ACESS SCHOOL FOR CONTINUING
EDUCATION
SEMESTER 1V
YEAR 2019

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Acknowledgements
I would like to express my deepest gratitude towards my senior colleague and advisors for their
continuous guidance and support in my project work .A special thanks to my dear parents and my
sister for helping me through the hurdles in research work.

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Table of Contents
S.NO. PARTICULARS PAGENO.
Ch-1 Introduction to Ecommerce 4
Objectives of the Study 6
Scope of this Study 7
Data Collection 8
Limitations of the Study 9
Executive Summary
Ch-2 International Trade 10
Ch-3 International Ecommerce 13
Ch-4 Risk Analysis 18
Ch-5 Risk Assessment 20
Ch-6 Risk Management 26
Methodology of the Study
Ch-7 Fraud Analysis 30
Ch-8 How are the Major International Ecommerce Players
Protecting Themselves
41
Findings 49
Suggestions and Recommendations 51
Conclusion 52
Bibliography 53

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Chapter 1
Introduction to Ecommerce:-
When items of utility or services are bought or sold via electronic exchange of money over an
online crafted platform it is called an ecommerce transaction. The beauty of this platform is it
allows users to access from the cossy comfort of their homes and offers a variety of items to choose
from and hassle free shipping and timely deliveries.
Types of Ecommerce:
Domestic: Pertaining to the national borders of a country an online platform catering to the needs
and demands of the domestic population
International: - Across all borders and oceans transactions which encompass currency exchange
rates and shipping costs.
Other than these broad categories ecommerce happens based on selection of certain criteria’s as
well like how much capital can be spent, category of products to be sold, based on what type of
online model shall be chosen to operate it. Apart from that some specifications also change the
way ecommerce shall operate. Some prominent ways are:-
Business to business
Business to consumer
Reward based marketing
Marketing based on ad words
Creating an online auction
Other types of marketing
Functioning of Ecommerce: Any business be it online or offline works on more or less similar
parameters , selling items ,buying items from suppliers and receiving orders from customers ,
delivering items to customers via different modes of transport depending upon the order and the
city or area to be delivered to . Difference arises in the ways these processes operate, on online
platform its transparent as to when shall the order be shipped from seller to you , time and the
delivery date are predefined in most product categories depending upon their availability . Unlike
offline stores here the quality and quantity of the product at times may differ or appear differently
in picture and color to can vary but such minute details can rectified by providing more genuine
and authentic and exact pictures.
Since it is an ecommerce business building up a website is a must be it on mobile or desktop or
both to connect with the huge customer base available in the country and overseas depending upon

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what one is targeting . Monitoring the website traffic and making more optimized that it appears
more frequently to customers on most prevalent keyword searches is also necessary. The website
should be user friendly in order to make the processing of orders easy and seamless and increase
greater traffic. A marriage between the target audience and the product categories available on the
portal is must for any ecommerce to survive in the game.
Benefits of Running an Ecommerce Business:-
Flexibility of time and space
With internet on boom it’s easier to reach the customer base within a nation and outside too.
Ecofriendly since one can do marketing and promotion with the ease of internet and digital media
unlike the offline shops.
Effective way of conducting a business with absolutely no expenditure of office space and loads
of money to earn with smart work.
One can save money on transportation and logistics by getting connected third party shippers and
or opting ways of docking products at a midpoint port depending upon the set up created for a
country or nations.
Is an great ground for choosing from and deciding what shall be bought
Customers are often given discounts and gifts as part of promotion and building up a loyal
customer base which is greater profits for the firm.
Previous reviews and recommendations by other customers are a great way to bank upon to decide
from the products to buy or not buy.
It’s an actual 24/7, 365 days open market place which is operable from the comfort of home or any
other place of convenience and an internet connection.
Hassle free and variety of payment options makes it feasible for all kinds of buyers to make a
purchase from.

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Objectives of the Study:-
 Understanding International Trade through Ecommerce Platform
 Understanding the risks to monetary transactions and fraud analysis
 Need of Fraud analysis
 Ways of conducting Fraud analysis
 How are the big players doing fraud analysis?
 Patterns of Frauds and Abuse prevalent internationally
 Benefit of Fraud analysis to the End Consumer

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Scope of Study:-
 Understanding the Operations of International trade through Ecommerce platform
 Hurdles and hassles in Trade to business and Consumers
 Understanding the monetary risk analysis and its need and management
 Benefits of analyzing the risk
 Understanding the behavior of International Ecommerce players in combating the risk.

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Data Collection:-
Usually the data is collected into two formats:-
Primary data
Secondary data
For the study the primary data has not been collected due to confidentiality clause attached with
people’s financial details and secondary data shall serve as the means to conduct the analysis and
understand the study.
Mode of Secondary Data Collection:-
Secondary data has been gathered from websites of ecommerce players, risk management, risk
assessment related data available on internet and journals and review papers, books and blogs as
well.

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LIMITATIONS OF THIS STUDY:
 Time constraint in preparing the report on the study has been the ultimate limitation.
 Study has been kept generic to ensure no conflicts of interests and any confidential data of
any firm has not been showcased.
 Primary data for the study couldn’t be collected since it utilizes the use of financial details
of consumers which are subject to confidentiality agreement between ecommerce websites
and the consumers.
 The study aims to generate a keen interest and progression towards risk analysis and
management in businesses big or small and throw light on the frauds being committed.

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EXECUTIVE SUMMARY OF THE STUDY:-
Chapter 2
International Trade:-
It refers to the movement of goods and services between nations and helps in strengthening the
trade relations between nations. Not only it is a great means of incoming wealth generation it also
allows to cater to international market and gain global presence and significance. Trade relations
often make world smaller due to good connectivity of transportation and logistics and
technological advances. It has a positive impact on the gross domestic product of nation and the
national per capita income as well which is directly hiking the living standards.
To understand the international trade – the specific goods manufactured by a country A are cheaper
than produced by a country B due to availability of the raw materials and technical know for it and
thus importing goods from the country A to country B proves beneficial and thus trading helps to
cut losses and increase profits. After great depression trading helped in gaining earnings from
business due to expansion of market places and customers which continues to be true for today as
well. P&G products are great example of how much they have successfully captured the Asian
Markets and continues to enjoy a monopoly till date. While European markets are don’t have a
P&G monopoly.
Thus exchange of foreign currencies is of immense importance in increasing the exports which in
turn helps in purchasing imports. Although international trade proves to be vital for the consumers
since it gives exposure to plethora of choices and comparisons to be made in prices and choices of
products but it does open the floodgates to competition among domestic and international traders.
This competition is a direct threat and as well as opportunity for improving upon the quality of
goods and services rendered. Without competition countries won’t improve and consumers won’t
be satisfied with the age old products to so suffice both trading is necessary.
Need for International Trade:-
Often a scarcity of a resource (here it can a product or a service) gives rise to demand for the same
and thus the lookout begins either within the nation or abroad. For eg before the cosmetic mafia
hit the Asian countries with their brand and their strategically altered beauty competitions countries
like India hadn’t heard of Ponds , Lakme and Nivea which today occupy a huge market place
.Countries also engage in producing surplus quantity of goods to exports overseas and buy imports
with the returns .
Globally speaking economies won’t function without the exchange of goods and services between
them and either country would stay poor or end up becoming poor due to lack of enough
opportunity for buyers or sellers or producers as well. Importation of goods takes place due to

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cheaper prices, greater availability of raw materials and technical know at cheaper prices and better
quality of the goods as well. China for instance is the global hub for trade and it takes pride in
manufacturing products of all classes in abundance to sell in the international markets on the basis
of ranging quality standards and pricing strategies.
Dubai on the other serves a port for trade and business and jobs to plenty of workforce and rejoices
in wealth generation through the same. Abu Dhabi on the other hand has a monopoly in oil market
due to abundance of oil wells within the country and supplies oil to world over. US on the other
hand opened gates in yesteryear’s to cheaper workforce from India to work in their offices and
improve the economy of the nation.
Demand for a product or a service is the major driving force in increasing trade practices. Bilateral
and multilateral relations too improve though the same and often the policies are made more
convenient and barriers to the trade to end up getting relaxed to benefit the nations.
Advantages from International Trade:
Nations are encouraged to produce the goods for which availability of resources to produce is
surplus and thus the goods can be manufactured in surplus while services or goods in scarcity are
imported from the nations which have it in abundance at better price and quality.
Traders are forced to compete other international traders and thus improve upon their craft and
skills in order to increase the revenue. While consumers have a gala time in comparing the variety
of goods to choose from.
Economies are boosted through the trade relations and nations become stronger due to availability
of revenue and funds to buy things, technology and other advancements to move the nation towards
a better tomorrow.
Jobs are created through the exchange of goods and services among nations and through technical
exchange as well. Walmart on buying the flipkart promised to create plenty of jobs for the Indian
workforce while as IKEA Hyderabad has wooed the Indian households with the great amount of
options to choose from and the quality to offer.
Improvements in transportations and logistics and automobile industries are a byproducts of the
global trade be it the metros in India, bullet trains in Europe and China and Fighter Airplanes in
Russia and France.
Drawbacks of International Trade:
Within a sudden shaking in global market can end up detrimental to plenty of firms engaged in
trade and thus cost jobs of many employees working for them. Traders working on small scale in
domestic markets can lose their livelihood from a dearth of work.

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Due to excessive imports the prices of domestic goods can witness a hike which can directly impact
the living standards and expenditures of the citizens and dampen the economic gains due more
credits and less debits.
Firms in infancy period can experience a blow due to excessive competition from domestic and
international players.
Too much dependency on imports can create a poor economic situation where in a country can
drown in loses and become poor as well.
To inculcate a balance in trading barriers are imposed which limit a country A from weakening
or harming the economy of Country B directly or indirectly
Trade Barriers:-
To maintain a control over the imports and exports to or from a country trade tariffs or barriers are
imposed to protect country’s economic wealth.
Custom’s Department is a dedicated cell which looks after in setting the rules and regulations for
monitoring the trade relations. Thus a list of goods is prepared which are prohibited, restricted or
banned or allowed free entry depending upon the item which is being exported or imported. For
eg. Export of hemp family products or seeds is prohibited in US but once can export from other
regions for levied charges while India allows plantation and selling of hemp seeds and oil in some
states and regions under supervision by the government authorities.
Before the brexit, EU was operating free trading between twenty seven member states. If Great
Britain decides to take a soft brexit then it still can enjoy trading benefits but the movement of
people shall require some regulations to be signed and discussed with while a total exit from the
union will mean taxes to be levied on trading relations. Unlike Britain current turmoil US, Canada
and Mexico enjoy free trade relations as per the NAFTA agreement signed between the countries.
To encourage trade with low developed countries special agreements are signed which ensure that
the trade caters towards improving the economies of those.
Countries like Venezuela bask in the poor economic conditions imposed by protectionism imposed
by the government to protect the nation just like Hungary it too shall witness a drift of people from
their native countries to becoming immigrants in foreign lands .
Nations which practice autarky limit themselves from the global exchange and thus dampen the
competitive spirits and need for advancements and easy access to abundance and choices of goods
to buy from.
Trade has not just meant the movement of goods and service it has also served as a doorway to
exchange of cultures, languages, spices and foods as well.

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Chapter 3
International Ecommerce
It is selling of goods to foreign customers via an online platform. Not only this works as a dry run
to whether or not investing in a physical location is worth the cause it also brings to light the true
picture of a firm in the eyes of the customers within the country and abroad. Challenges to any
business continue to be the same be it on online or offline , adjusting the categories of items being
sold as per the taste and preferences of the consumer depending upon the geographical region and
their cultural beliefs is a must to able to blend in well. Eg Mc Donald’s has to research what would
suffice the Japanese customers because unlike the crowd of United States they like having their
food with peace in a restaurant instead of being on the go while having it and also rice was their
staple meal and part of their every meal due to which the Mc Donald’s had to inculcate a rice
variants in their fast food range and include fermented foods and drinks as part of their meal plan.
As much as it is part and parcel of going big it is also a part of keeping in check what shall work
in one country may not work for the other and thus research of the market shall always be the key
in excelling. Along with a lot of back end processes take place which too have to dealt with
attention. The operations, logistics and transportation, supply chain management, quality
standards, inventory management and etc.
Operations:-Looking after the human resource and the workings of the online portal be it adding
products to cart, processing the order for shipment, checking the inventory for stock available
before processing the order, training the staff for handling the international orders all forms an
integral part of the trade.
Customer Preference’s:-Monitoring the traffic on websites is a must to understand the customer
choice and wants in order to make such items available for them which can vary from country to
country, region to region, age group, gender and geographical locations as well. Sending them pop
up ads while the customers are surfing the net to ensure they are constantly being reminded of their
choices.
Online Presence:-Some firms still believe in adopting the mortar and brick wall structure over
their online presence and thus lose out on the building an online presence. With the current trend
of mobile apps more and more are forced to move on online platforms to cater much better to the
customer requirements. Not only it gives them an idea regarding the customer choices but also
shows the inclination of the upcoming traffic.
Need and Ways to Expand: - Firms looking for expansion must have a blueprint of the plans of
expanding, projections of how the firm is looking forward to increase revenue , how the customer
base is being worked upon to build a wide spread audience .What are the areas of concern and how
is it being checked .

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Research Work: - It is an indispensable part of the any business entering a new area or looking
for expansion into one. Market Research, quality research of products, quality checks, building
and monitoring the website, taking the preferences of consumers as per their cultural and languages
spoken and creating ads and marketing strategies based on them. Providing region specific
products, region specific payment modes to enable easy and hassle free transfer of money. Making
future and current projections and accordingly investing in the growth areas and expanding in
markets where returns are high so as to have a sound business running.
Way to Enhance the running of International Ecommerce:-
 Customization to suit the local audience:- Every business tailors its products or
categories of products to suit the local consumers of the area in which business is being
developed , their language and cultural values , tastes ,even the hoarding s of the ads on
billboards are kept specific to area wise in order to cater the product to the consumers in
the best way possible .for eg the clothing of HM available in India and China is way
different in quality and variety since customer base is different and race and cultural beliefs
are different. The sizes of clothing available shall be different as per the population average
size of every country. The address of the country to which the parcel of the item is to be
shipped shall be different depending upon the how the addresses are written there and do
they have pin codes or zip codes or any other details .Then time zones are also an integral
part when shall the parcel be delivered to the concerned customer depending upon which
country zone and time zone within that country is also a needed detail to give timely
deliveries. The packaging of all items must have instructions written multiple languages as
per the regions it is being supplied to keep the cultural boundaries in mind and not hurt the
feelings of the people who might not be comfortable reading a specific global language.
Keeping a tab of the public holidays and t festivals of the region to which the products are
being supplied to in order to have sales day accordingly in those regions and marketing too
has to be kept specific as the festivities and special holidays.
 Strategy behind the pricing:- What pricing being set up for an area influences the
customer base for that product and accordingly the product either plummets or sky rockets
in sales for the region. Often some regions like Australia and America people like to buy
items which have a price tag with digit of nine as the last digit while Indians prefer a whole
number as the price like 20, 30, 400 etc. Exchange rates are often a mood spoilers when
buying from foreign lands but the ecommerce businesses adopt special measures for
keeping their prices fixed or stagnant for some duration or may be longer durations as well
depending upon the product and its sales revenue projections.GST and taxes being added
up in the end can be spoiler in most cases since the customer hadn’t expected in spike in
the bill initially while shopping.
 Cost of product post being shipped and landing:- While importing products often the
home countries keep the landing cost higher in comparison to the shipping cost due to

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tariffs , exchange rates of the currency change , custom taxes and many others except the
manufacturing cost of the product.
 Payment Modes:-All kinds of payment modes must be accessible be it e-wallets or credit
cards, debit cards , bank transfers , gift cards , e-cheques and others . The variety in payment
method allows customer to choose the most convenient one of the all and thus customer is
always happy in coming back for a great experience.
 Shipping and Logistics: - Often firms feel a dilemma situation in being able to reach the
nooks and crannies of area since logistics firm don’t deliver their or the costing is too high
.The recognized areas and well-built ones don’t face much problem so midpoint deliveries
at known place or kiosks which have compartments or lockers for storing the parcels of the
consumers is adopted. The third party shippers work a great deal in US and Canada in
reaching the congested areas.
 Service to the customer :- Customer is the ultimate god when it comes to the ecommerce
,time deliveries with unhampered packaging of the product and options to deliver at
different locations within the customer’s vicinity location so as to offer him/her the most
suitable option to choose from and the timings as well makes for loyal customer base .
Customer vouch for hassle free shopping be it offline or online and it if the comfort of
shopping is possible the comfort of their homes then why worry. In case of unexpected
situations like the product delivered wasn’t in the best condition or wasn’t working to the
likelihood of the customer then the rescue is exchange or the refunds depending upon
which ever is possible as per the product category .Customer feedback for the same product
should also be accounted for .
 Protection of Confidential Data : While handling all the transactions of the customers on
regular basis the firm is privy to the private details of the customer like the address and
bank account details, credit card details and etc and there’s always a chance of data leakage
thus an firewalls or some sort of protectionism is supposed to be inserted in order to keep
the details from getting exposed or leaked , personnel’s handling the data shouldn’t be
allowed to carry any paper or pen in order to record any details neither should system be
recording any details of the transaction .

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Alteration in Customer Behavior with the Intervention OF Ecommerce:-
Ever since the online shopping hit the internet people have started to opt for more and more online
options over actual physical shopping and the ecommerce sites can’t stop raving about the same.
With special discounts being offered to customers on festivities and promotional sales and slashed
off prices of consumer items its gala time for shopaholics of the online brigade. With wide range
of options to choose from for any item to seamless and hassle free payment options it is comfort
and a sense of joy for the consumers. Due to the mobile based applications of the online store
taking a sudden hike in the market it is buzzing all year long with black day sales offers to 4th July
labor sales to Diwali bonzas and many more. Unlike the tangible shops in the market where it is
so crowded and busy online shopping offers customers no queues or delays and they can shop and
time and anywhere with the internet service of their devices .Now a days a lot of physical stores
are also venturing into making themselves an online store so as to get more traffic and orders there.
The benefit of physical stores going online allows buyers to try product in their home and replace
it if they dislike the design or the size doesn’t fits and for the rest of the online shops as well there’s
a fifteen day returnable policy in case of any issue with the ordered outfit. As much of an ease it
is for shoppers to swipe right or left with their fingers and make a purchase or add to cart the online
stores have quite a lot to do behind the scenes –revamping their stock each season to give a better
variety and shopping experience to customers, increase their sales extensively and keep working
to cater their customers on a personal level as well through their feedbacks and reviews and
recommendations. Customer Service /Care department of the store must be always online to check
up the customers facing issue with late order deliveries or delayed ones or any other issue they
may be facing. Valuing the customer is the key to proceed in this industry. The online stores offer
the benefit of saving things for shopping later or subscribe and save where the particular item gets
delivered every month and the monthly deductions are at a discounted price, to making wish lists
where the product a customer is willing to buy is slightly in an expensive side but as soon as its
prices drop he/she shall receive a push notifications for the same. With the influencers thriving on
YouTube and instagram their recommendations are given importance by their followers and the
buying list takes a tour towards those products which has in some ways affected the ecommerce a
lot since if a influence gives a bad review about a particular product people refrain from buying
those products and look out for the other recommendations of the same product. So now the brands
of the products are collaborating with the influencers to endorse their product and get their
followers to shop online. But the consumers are more aware what to buy and where to buy it from
unlike the previous generations which bought of what was trending so it is becoming tough for a
majority of ecommerce players out there. A lot ecommerce players have started to woo customers
by offering greater discounts for shopping a certain figure of amount or release a yearly
membership offers, giving grocery items to pantry items on the same ecommerce platform. Even
then customers today are eagerly reading the ingredient list and searching online if the product is
safe to consume in case of an eatable and same for the products used in topical application on body
and face. In this new risen world of informed customer the ecommerce have to buck up to offer

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best quality products and options to choose or else they will look for better online store which can
fulfill their demands and needs and with reduced shipping shopping from international brands for
a lot of stuff has become easier and thrifty .While Men purchasing online will be quicker in
choosing their choices and completing a transaction female on the other hand will check out all
options in terms of variety and price range they offer plus the delivery speed and the color of the
merchandise as well. Another fact that most shoppers don’t like is suddenly being bombarded with
hidden costs which were earlier not included or made visible to and thus a lot of shoppers divert
to another site which is more honest and upfront with the costs.

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Chapter 4
Risk Analysis:-
Before understanding risk analysis we must understand what risk is, it is a situation or a cause
which exposes a thing / person or any valuable item to danger which can be in terms of loss or
complete corruption of it or any other inconvenience which can hamper the particular item or good
in concern. Just like before crossing a road a pedestrian must look on the both sides of the traffic
and check if the there’s no traffic then only he/she cross the road to avoid accidents or sudden jerk
due to being halted by a vehicle likewise checking for leaks within the data processing and
compilation while carrying out the transactions of the consumers on a daily basis is a must is what
forms the risk assessment. Risk Assessment is carried out for everything be it the firm itself or the
financial details of the consumer or the key details in managing the data protection done by a firm
to others. Prevention of loss is better and thus requires a lot of planning on what shall be adopted
by a each firm depending upon the infrastructure of the ecommerce business, amount of
transactions being dealt and other nitty gritties. Before conducting a risk analysis of one’s
ecommerce website one must identify the potential and possible threats which can frauds, identity
thefts, abuse patterns and etc. to a get a general idea of the situation.
Following are possible options to look out for greater clarity of the situation:-
 Traffic generating pages: These pages are the most visited pages by the onlookers for
shopping and can be the first thing that gets exposed to fraudsters or any cyber criminals.
Thus evaluating the pages from where the traffic gets diverted to the ecommerce website
and who are those people is a must for keeping in check the website and its performance
in order to prevent it from getting hacked .
 Seamless Navigation: Having buffering pages in between the transactions or navigating
while shopping from page to another can point to potential threats of falling out on efficient
performance and thus being susceptible to viruses and malware being spread by the
fraudster.
 Journey from cart to payment option: This seems to be the most critical step of the order
since during this duration if the pages break down due to server overload or any other
underlying issue from the website’s end or internet connectivity there can be chances of
losing out on the confidential details getting exposed to any fraudster on the lookout for
such situations thus protecting the entire processing of the order from confirmation to the
payment being made is important for the firm and the consumer instilling trust in the firm.
 User Credibility is essential: Any guest entry is often viewed suspicious since the person
looks more of a window shopper than a certified buyer and thus is less trustable same goes
for the ecommerce customers who shop through proper channels of logging in have more
credibility and thus their mutual trust. Even then keeping a tab on the orders of the
customers and understanding their behavior is essential to deduce whether or not they can
be worth trusting or is their account activity showing red flags.

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 Ensure utmost data protection: Since customer discloses a lot of confidential details as
part of his bio or payment to get the order processed the ecommerce running firm must
encrypt their data to safeguard their consumers and operate without any fear.
 Promotional Activities: Such pages are often to be ensured to be tested and thus require
constant checking up to manage the easy navigation during the promotions and sales days.
 User and browser compatibility of the website: Users of the website may come from
different countries and may be using different devises and browsers to operate the app does
the ecommerce offers such adaptability of the browser and the device configuration settings
if not then its high time one does that to attract more and customers towards the site without
falling on such trivial parameters.
Now since risk has been analyzed we now need to understand its mitigation which is a part of Risk
Management.
Difference between Risk analysis, risk assessment and risk management:-
Risk Analysis: - Here we are concentrating on the amount of loss occurred or about to occur
basically it talks in measurable terms about the loss.
Risk Assessment: - It is concerned with the ways being utilized to evaluate the risk be it thorough
some specific technical know or techniques. It is an important part of risk management and is
bothered about the analyzing and identification of the risks part.
Risk Management: - It is a package of carrying out evaluation of possible and occurred risk,
analyzing them and working on the mitigation plans and prevention as well.

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Chapter 5
Risk Assessment:-
It is the process of identifying the threats, evaluating them and then finding solutions for those
threats. Here the threats to a business are thoroughly assessed in order to understand their severity
and what damage they can cause and accordingly take the appropriate measure in eliminating them.
Risk assessment can be carried out in two fashions either in numerical data based assessment or a
behavior based one.
How to Assess a Risk:-
 Identification of Risk
 Which process or task might be directly or indirectly affected by it
 Analyze the risk and work out what shall done to avoid the occurrence
 Make notes of the consequences post and pre implementation to understand the change
 Carry out regular testing routine to evaluate the current progress and make the necessary
where ever required if any.
Pointers to remember while Planning:-
A risk is a threat to an organization which can cause rampant loss to its revenue, processes
operating and the assets of the firm might also experience a damage. The degree of the damage
may vary from process to process.
Importance:-
Maintenance of health of processes and organization at large is part of hygiene and shouldn’t be
ignored or taken for granted. Thus following a step by step approach is best way to execute the
management and also safeguard the interests of all involved entities:-
 Making the staff and company executives at all level aware about the risk possessed by the
business operations at macro and micro levels
 Affect and effect of the risks to be identified.
 Chart out what shall work as remedy for the same.
 Choose where the remedy is a necessity and its degree of implementation is needed more
where at task level or a process level.
 Adequacy of the remedies must be evaluated at regular intervals in checks being conducted
in order to provide updations to the methods prevalent.
 Implementation of measures to tackle risk must become a top priority.
 Regular discussions with the firm management and the legal team and the dedicated risk
handling team must be done to come up with right approach.

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Objective of Risk Assessment:-
Like every measure has a purpose to solve so does the risk assessment, it is adopted to serve the
interests of the organization in the best possible manner and also to have smooth running of the
firm so as to work with clients seamlessly and give them their desired outcomes. Such smooth
running can only be possible if the threats are in check and proper monitoring and elimination is
taking place without hampering the functioning of the firm at whole or at any levels. This requires
planning, evaluating the best techniques and timely addressing the situation so as to be alert and
effective in terminating the cause before it acts up.
Following questions need to be addressed and discussed from time to time:-
 List down the feasibility of risks to happen and when and how will it happen
 Consequences of hazard and how can it effect
 Probability of the hazards to occur in a certain manner
 What action plan to devise and what is already devised and how much is it controlling and
is there a need to revamp the process.
When Should One Do a Risk Assessment? :-
Like a regular health check up to the doctor risk assessment too requires a routinely checkups
during beginning of a new task or process or winding up of projects and mid and quarterly checks
as well to keep the threat at bay. Hazards don’t have any set time to approach or exit and therefore
careful monitoring shall suffice the business in keeping concerns under the belt.
How to Plan it:-
 The goals from the assessment must be discussed so as to achieve effortless functioning of
all departments and the organization as a whole.
 What shall the assessment entail is also an integral part of this process so as to gain clarity
about it performance and difference it shall create.
 Making available the needed resource be it human or software and tools
 Clarity about the evaluation techniques and their costing and benefits
 Company shareholders and investors must be a part and parcel of this assessment.
 Amendment of laws, regulations to uphold and safeguard the firm interests and following
policies to carry out any procedures is to be ensured.

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Working of Risk Assessment:-
At first a proper team or committee should be set up to manage and carry out the process. The
team or the committee must an equal balance of professionals of risk assessment, advisors of the
organization, shareholders, stake holders and investors. Then begins the procedure of gauging the
speculations in relation to the processes and procedures forming the corner stone of a firm.
Figuring out the odd balls to be encountered and their occurrence and what shall be the rate of
occurrence. At what rate and degree are they being managed and kept under controlled currently
and how can it be further improved or altered to have an upper hand?
Measures adopted currently and the high risk situations being accounted what is the order in which
the situations are being dealt or there isn’t any system for the same. Is the risk still persisted or it
has already been dealt with. Are regular hygiene checks on the round going in practice to keep the
control measures in check with their performance and effectiveness?
Pointers to into Account:-
 Are the resources to handle and mitigate the threats enough? –human, technology and
expertise required.
 Is there an interval based training for the personnel performing the assessment in order to
keep them update with the present scenario?
 What is being done to test the capacity and capability of the measures in practice
 How much time goes behind carrying out the task of assessing a risk to mitigating it
 What is the frequency of the risks and where is its occurrence mostly concentrated.
 Are the industry experts being considered to offer advice on mitigation and checking up
with what techniques should be used as effectively and keeping in mind productivity of a
firm to deliver clients?
 How long does it take for a project initiation to completion and how the testing are and risk
analysis and assessment carried out.
 The modules catered to staff for educating them over the subject how updated it is and is
it still effective suit the present scenario.
 Is there any mock drills/ dry runs carried out to understand how the staff shall perform
when actually faced with the danger?
How is a Risk identified and Categorized as a Risk?
To take this up, historically what risks were encountered are studied and understood in order to
understand what are the possibilities and areas which tend to be more prone to such dangers and
thus must be viewed with a detailed eye for any unusual activity. Training and educating the staff
working closely with threats must be given dry runs and [practice to understand the feasibility of

23
a hazard , the consequence it cause and how much revenue and time it can take in recovering from
the same.
 To refrain from any amiss situations careful analysis is mandatory on day to day basis.
 At every level some coordination and evaluation personnel must be dedicated to
understand the prospects of probable hazards.
 Recalling what measure worked in past and what measure is being adopted now is
necessary to understand the nuances.
 Informing all the important leaders of nay new developments or encounters with threats is
required to maintain a stability against the curve balls.
 How the management of work and scheduling affects the risk or any particular practices
are exposing more to risk is also required to be regulated.
 Making projections regarding unknown is an indispensable part of the drill to start prepping
from before.
 How can the risks have effect on the clients work or deadlines to submit work is necessary
as well
 Distribution of Work, threat it is exposed to and what are the possibilities of it becoming a
higher risk, how much priority it possesses and how to monitor and control the outcome.
Likeability of Threat Causing Harm:-
For this every possible and feasible risk to a firm has to be carefully studied, analyzed and thorough
data must be referred to make do with what scenarios can be expected, when and how.
 From studying the products being ordered by customers
 To studying the shopping behavior of genuine buyer to a fraudster
 Knowledge gained by experienced personnel and the new ones on the block
 What legalities must be introduced into the business to protect it from the threats to happen
 How the business procedures should be regulated to keep up their standard of secrecy and
protection from the unknown.
 How meeting and setting up the standard principles and guidelines goes a long way in
protecting the company interests.
 Researching the competitors in the trade as to know and implement what best practices are
there in the market.
 Testing the processes for risks and obtaining the performance sheet of previous quarter and
the current to compare and implement if any amendments required.
 Detailed observations to be made of every task being performed at all levels which are may
or may not be at risk.

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Factors Responsible For Threat:-
 Data which being transferred from one system to another via email, cloud transfers or any
other way is always prone to getting corrupted or leakage
 Transactions being performed for customers of the firm must be ensured to have a
encrypted gateway of payment to have maximum protection and confidentiality of their
financial details.
 The mode of communication must be a secure and safe and not be accessible to scammers.
 Customer base approaching the firm for goods /services is also an indicator of the risks a
firm is exposed to if a customer is genuine one he /she will behave a certain way but abusers
and fraudsters are usually using some innate methods and buy goods at random pace .
 How equipped is the website to handle high traffic which are days of the sale or festivities
and equally exposable days to experience more frauds and risks as well since the website
has to over perform.
 How equipped is the grievance department in handling issues of any kind of hassle being
faced by a customer or how to does the customer care department take care of situations of
threat to customer.
Ranking of Risks:-
In order to work on risk they are segregated on the basis of their priorities so as to set out a carefully
laid out plan as to proceed in a systematic manner. A priority based risk handling ensures to tackle
more urgent situations first and then proceed on as per the degree of importance and the cost it can
cost in case of experiencing loss. Assessing and prioritizing can at times become cumbersome
since each process is indispensable part of the organization and thus how closely an employee has
to work with the process or the task at hand and how exposed is the work to the risk and how much
difference it shall cost to the firm and the customer base is equally important to keep in mind while
deciding.
Now the level and degree of risk attached with a task may vary and the parameters to judge also
aren’t very stringent but there isn’t any stop solution to all either. Thus tailored situations for every
new threat is to be crafted and applied in order to attain full security within each and every task.
There must be a direct connect with the organizations’ productivity and priority of a task, its effect
on the overall and how important it is for the smooth running of the operations.
As per the complexity of the task the techniques can be discussed and applied accordingly. But in
situations where brainstorming sessions don’t help in devising the appropriate technique then
matrixes and checklists can be used. A two dimensional axis system can be used with taking
probability of risk occurrence on one and the severity of risk on the other to make stark comparison

25
between the two. Other methods can be made with different color ratings to gauge the severity of
the risk.
Measures of Controlling the Risk:-
 Either eliminate the risk completely or look for replacing the process which possess high
risk severity.
 Implementing process with modifications in carrying out work which reduces the risk
exposure and thus maintains the level of task performance to optimum levels.
 Conducive Work Environment is an essential part of reduction in the risk be it through
keeping the department exclusive to the employees of that department only, going paper
less and do personal items or bag allowed to avoid any data leakage or exposure to the
work from the outside and the shift between which the work shall operate.
 Taking special measures in maintaining absolute surveillance on the floor or building for
the dedicated department.
 Setting up and AI backed system which is protected by firewalls and encryption to keep
the data related to the transaction exclusive and safe within it. Not linking it to the server
to avoid any transfer of the information.
Check on Assessment Process:-
In this department of risk constant monitoring over the processes and the techniques in execution
is also necessary because the severity of exposure to the processes is always running high and thus
any mismanagement can cause a loss of millions and billions. From keeping a close eye on the
accuracy levels to performance levels at task to process and firm at whole is necessary to
understand the resultant of any action going wrong can impact the entire chain of actions.
Documenting the Methodology:
What all are the risk, the factors influencing the risk, causes and concerns for firm at project level
and at customer level to what shall be the techniques and implemented measures adopted and the
range of severity from before and after implementation and during the transactions everything has
to be documented with associated legal team and to guide and provide a degree of confidentiality
to this work and also observe that the process remains known to the concerned personnel only to
avoid any loss of valuable assets of this department .

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Chapter 6
Risk Management:-
It is process of analysis, prevention and mitigation of any possible threats or occurrences which
may harm a firm’s financial status. The threats could be from data leakage to data corruption to
baggage of legalities, loop holes in strategies and natural calamities. Now losses related to data
tops the list and becomes the centre point of all the major ecommerce firms because the stakes are
much higher than any other losses. Now a days every firm runs a risk of facing many threats to
data related issues and the cost of the loss can be detrimental to the firm’s business and even result
in closing down in the long run. Thus keeping a close eye on such risks is the need of the hour.
Need of Risk Management and Its Importance:-
Just like before a burglary takes place if the alarm goes off the burglars end up escaping more or
less empty handed ensuring and preparing for the possible risks running high for the firm can save
firm from monetary losses and an embarrassment of not being aware about the scenario. A viable
and reliable plan for mitigation will benefit the firm in not only the short run but for long term as
well. It will also create an awareness among the office staff regarding the same and save them from
suffering a loss of hard work and their efforts. The carefully crafted approach to tackle the threats
shall be incremental in achieving the organizational objectives and vision.
Additional benefits:-
 Makes the work environment conducive for the employees and threat free of losses
 There’s a sense of stability and ease in running the operations and thus less dependency on
legalities.
 Saves company’s face from embarrassment and suffering huge losses and thus prevents the
close down.
 Security to assets of the firm and the fearlessness of the loss.
 Saving from expenditures on paying money to insurance firms for loss of assets.
Risk management is being adopted in industries due to risk of losing out on valuable data and
assets of firm and hence strategies being adopted may be different but the end goal is the same.
Strategies to Follow:-
 Build up the base: Before carrying out the risk analysis of the entire processes of any firm
one must establish the some ground rules to analyze the risk in a process and how to
proceed further in systematic order.
 Identification of the possible threats: - Now is the time to check for risks across processes
in order to decide how to mitigate them and prevent them for longer span.
 Carry the Evaluation: Once the risks have been identified firms have to conduct the
evaluation of the risks at every process level. What are the different ways a risk can occur
and its possibilities of harm it can cause?

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 Assessment of Risk: Detailed evaluation of the risks and how they can affect in short term
and long term, what is the amount of loss it can cause and how likely is the firm equipped
to mitigate it.
 Tackle the Risks:-Most highly likely risks to occur are evaluated first since their
occurrence possibility is the highest and some plans are devised in order to regulate the
processes which are at danger for the same in order to come up with the best solution to
avoid the disaster from happening.
 Constant Supervision: Devising plans and control over a process is of no use if a constant
supervision is not kept to act upon when the threat is about to strike or strikes. Along with
re-reviewing the charted approach to mitigation and prevention is equally important to keep
up the changing patterns of the risks.
 Review and Discussions: Regular meets with the company board directors which include
the shareholders and investors to brief them about how updated are the risk mitigation
measures are and how can these be further advanced or modified to cope up with the
diversity of consequences and threats always waiting to occur .
Apart from following these strategies there ought to be discussions about even after putting up
barriers to prevent any harm what are possibilities of the planning going down the drain for both
the organization and a particular process or at an employee level as well. How big or small shall
the impact of the consequence be on the firm, process and employee. How to revise a better plan
to cancel out the danger hovering and if somehow the disaster does happen what can be the
evacuation plan at that moment. How much expenditure does this run the organization pre and
post the disaster.
How to Manage a Risk:-
 Avoid the occurrence: - Firm must try to do much thorough checks and constantly
monitor and reevaluate the mitigation plans and measures to save the firm from losing out
on money in post damage control.
 Reducing the after effects of risk:-Even though a risk has occurred how to reduce its
impact on the firm and the processes that may run a viable chance of getting affected due
to the same.
 Distribution of Risk: If the effect of an occurrence of risk gets distributed then the impact
too gets reduced to one particular area of concern and thus firm can saves on bucks.
 Allowing some risks to occur: This happens when the gains are much more in
comparison to the amount and degree of risk to a particular process or a project work or
firm’s particular decision at the higher level. Here the firm is quite confident of taking
some calculated risks as the profits in return are much more than the disturbance or any
loss from the damage caused.

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Drawbacks and the boundaries of Risk Management:-
As much as of a boon management of risk feels it is cumbersome and at times an expensive affair
for the organizations. The measures might be suitable for a particular task at hand but cannot
fathom the same goal for the entire project or the firm at whole. Some detailed or lengthy
processes run the risk of getting projected with fewer risks due to wrong adaptation of mitigation
methods and thus can prove hazardous to the growth and development of an organization
Some other limitations encountered are shortage of adequate duration to carry out analysis of the
risks and the personnel hired or dedicated towards checking for risks must be trained
professionally for the same so as to give better outcomes in management of the same.
 Solution is false hope :- At times some measures which have been adopted are based to
work on the historical performance and data of the process or position of an entity which
might not show severe signs of damage but will be detrimental instead of a boon
 Mirage of Regulated Risks:- Often some risk management techniques can come off as
setting up an illusion of being able to tackle everything that can pose as threat to the
organization at process or task level but will shatter the beliefs in practice and thus should
be avoided since every risk measure cannot be planned or be readily available in the
market since risk patterns too keep getting changed and thus prediction and forecasts wont
work.
 Complete Reality: Often firms lack or miss reading things in totality and thus end up
focusing on small details or smaller risks in this case.
 Purpose is never fulfilled: There is still a disconnect between the measures being adopted
to manage the risk and the idea behind the risk management intervention which keep the
true purpose from being served for the firm.
Like any other industry some authoritative bodies in Risk Management have standardized some
rules and regulations to be followed for the a better assessment of risk , carrying out analysis and
adopting ways to avoid or ensure smooth working of the firm and the processes within them.
Two such bodies are ISO (International Organization for Standardization) and the NSIT (National
Institute of Standards and Technology) which provide ways to reduce risk and identify and
mitigate them.
ISO has some set of recommendations for all the firms to follow irrespective of their size and
industry:-
 Any task or process in relation of risk management which is being carrying out by the
organization should add value to its reputation.
 It should form part and parcel of the firm’s working.
 Should be a part of the important decisions to be taken for the firm.
 Areas having ambiguity need to be addressed regularly.

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 It should be streamlined to follow it easily.
 Personalized to suit and help the particular process.
 Accommodative and flexible
 Must be devised to accommodate the shortcomings of humans like missing out on
something or accuracy of data.

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Methodology of the Study:-
Chapter 7
Fraud Analysis
Post understanding the importance of risk analysis and risk management it time to address the
elephant in the room i.e. fraud. Fraud in simpler terms is criminal or wrongful activity done to
cause financially or in a measurable manner to the firm or any entity in concern. Any wrongful
activity is committed to gather some advantage which is differ from industry to industry someplace
it can for some gaining someone’s important document for misuse and some place it can be for
some monetary aspects . Since here we are concerned for ecommerce – the fraud committed will
be used to pose threat to two entities in question one shall be the customer (if he/she herself/himself
isn’t the fraudster) and the ecommerce firm involved in the transaction. Most common fraud are
committed with identity thefts which can be using a credit or debit card or hacking someone’s
bank account details though phishing calls. Loop holes in the technological advancements allow
hackers and fraudsters to access someone’s private and confidential information and make use of
it for their personal gains. Although banks ensure at their end a full verification of customer each
time they make a transaction which is of high amount and even for smaller amounts the pattern of
activity of a legit customer and fraudster is supposed to different and that what gives the details
but even after careful approach there are times when a fraudster can replicate the move of a genuine
customer and come make a lump some damage to a genuine customer or the firm itself. Methods
of committing fraud have changed with updations in the fraud detection techniques and sometimes
it’s not easy to catch up with new ways of the fraudster. These the frauds don’t confine to acquiring
data from credit or bank accounts only the social media platforms and the activities done there are
another quick clues for the fraudsters about the details of the customers because some customers
perform transaction through Facebook and Instagram as well, apart from hacking email accounts
to changing the password of the applications being used to make transactions are new ideas of the
fraudsters are adopting.
Some Common Types of Ecommerce Frauds:-
 Fraud with identification of a person:- With the excessive occurrence of this fraud been
witnessed by the banks , ecommerce web sites , electronic card companies and e-wallets
and etc. The loop hole of the technology is easily taken advantage of by the criminals and
credit cards are the easiest of the lot. All such phenomenon’s usually occur with calls from
fraudsters asking for banking details and otp and people are fooled in giving the same or at
times they ask for social security number and the rest is an easy drive to the account and
ongoing transactions cash out the balance before the person knows they have been looted
and they have no one to blame. The other type to get the information is making people to
enter their passwords into a fake website and then hackers use the same password for banks

31
and other sites to hack into the system. Next is the putting malware in emails or hacking
the data while it is getting transferred to the bank or the ecommerce website.
 The smart chargeback demanders:- Here a customer acts genuine and initiates a
transaction and post receiving the product claims either he/she didn’t order the product and
someone has stolen their details and placed the order while in reality they sit back with the
product or service they initially placed an order for .
 Dirty Fraudster: Here the fraudster is has been a step further and uses stolen card for
making transactions he /she knows how to counter the payment fraud detection methods
and easily is able to gather information regarding stolen card holder and thus now places
small and thrifty orders on the ecommerce websites to begin with so as to confirm the card
works or not.
 Official attachments: - Here the hackers start with getting people associated with fake
transactions in order to get more traffic on that site and end up ousting their details through
it.
 The Triangle fraud :- Here a person acts a seller and creates a fake store for selling some
goods at very cheap price and real people get trapped in it since it offers some really good
discounts and offer is limited involving usage of a credit card and once the transaction goes
though the fraudster who was the seller uses a some stolen card details to actually place an
order on real and genuine ecommerce website and the order is shipped to the customer of
the fake ecommerce store and this fraudster keeps placing orders with different stolen cards
and the ecommerce website can hardly connect the dots and it goes undiscovered and
fraudster makes a fool out of the ecommerce .
 Fraud by a seller: - Here the order are placed but never shipped to the customer and the it
can happen in both consumer goods or goods being purchased from a whole seller this
method is used to fool both genuine customers as well as reseller merchants and the
methods used for payments are generally devoid of the chargebacks option so that customer
never is able to get back his money.
 Multi-channel Sales: A website which caters to multiple countries is more susceptible to
fraud as sales are happening across countries and there’s no demarcation to check whether
or not the customer is a genuine one just by the transaction and single channel merchants
are not trustworthy so a customer has to be careful as to where he /she spends the money.
 Nigerian Prince Scam: Here the scammer asks for some money in return for huge amount
of money to be paid to the customer later, scammer has done his research here and
categorically targets business firms( who are service providers) to oust money of them. The
scammer poses as a client who drops an email to the business in order to use their services
and although they are currently engaged with another party in business and are able to pay
some amount and convince the service provider firm to pay for them and in return they
shall pay the double and more and they shall look forward to take their services for doing
the business as well. The cook up is made legitimate enough that people get caught up and
end up being scammed.

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Some countries top the charts for having the most fraudulent transactions with Indonesia
contributing over a 30% and Venezuela comes at the second position, South Africa contributes a
25%. Brazil and Romania which are countries making the most expensive purchases make among
the top charters of the list. Continent wise Africa is the biggest contributor towards frauds and South
America comes second followed by Asia and North America.
Although we have these scenarios to stay vigil and act accordingly but at first not every transaction
will come baring red flags some will look genuine, the skill of the fraudster will tell the tale of his
crime to be committed his pattern will speak louder words and after over and over encountering
with the same shall the professional analysts be able to detect the scammer quickly.
Some Tell Tale signs of an Ecommerce Scammers:-
 Odd way of writing things: - The information given by the customer (scammer) will be
incorrect in spellings or zip codes or pin codes may be incorrect and not match n searching
and sometimes the faults in email id or name too will feel odd not something a genuine
customer will attempt.
 New comers:-Often the scammers don’t repeat patters or their prey and thus they are the
first time buyers at any new website and don’t return back again and thus first time buyers
must be eyed with scrutiny in order avoid letting them go with committing frauds easy
breezy.
 Multiple card User:- If a person is placing multiple order and using multiple cards to
carry out those transactions that’s flag in itself he/she is not genuine .The order could be
placed by the same billing address and going to different shipping addresses for delivery
or multiple cards used to bill the transaction coming from same IP address and yet the
orders are going to different but near addresses or card transactions are multiple and may
be carried out within one time or at different time to showcase some trust .
 Placing the Bulk Orders:-They are the flamboyant ones as they place orders for expensive
goods and may have chosen for quick delivery something like a 1- 2 hour delivery so as to
get the product in their hands before the fraud analyst discovers the fraudster.
 The Fake One:-This one comes with weird names for online email ids and customer names
as well, even the address too can look and sound weird in fact the numbers provided too
can be non-existing.
 Numerous Failed Attempts: Here a person is failing a transaction multiple times and the
fault caught might in entering the number of the card wrong which is a telltale of his failed
attempts.

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 Takeover of a genuine account: This too is common thing among scammers and catching
this isn’t easy until the genuine customer is a veteran or an old customer as the transaction
history will seem to show signs of difference in the purchasing pattern, time, date and then
internet service provider will be different and there you can make out the fraudster. Such
things.
How is Fraud Analyzed and Who Conducts it?
Fraud Analysts are the one’s conducting the analysis of customer accounts to check the validation
of a customer also look for the solution for combating the fraud and mitigating is taken from the
trained knowledge gained and the industrial experience gathered over the period of years with
working on the subject. Since the patterns of fraud are constantly changing there isn’t a one stop
solution for all and thus each time some new logic or learning is to be implemented to get out of the
problem. A lot goes behind the scenes in giving the ecommerce a trustworthy title by the customers
, be it examining the fraud patterns , matching the scammers to it and the calculating the revenue
actually lost to checking and monitoring the customer’s activity to rule out any doubts with regards
to his/her credibility .
In order to rule out a fraud transaction analysts have to go through a series of information and
conduct a thorough investigation to make out all the parameters of the situation and the degree of
the situation. Some of those pointers are listed below:-
 Historical data of Customer:- Analyst check for the signs for validating the credibility of
the customer thorough the amount of order history if a customer is old customer on site or
if he/she is new then whether or not his /her details are verifiable like his/her address could
be found on Google or any other address locator tool specific to the ecommerce firm . Do
his/her email id looks fictitious or he/she ordering something which is too expensive or
his/her orders reflect more of a fraudster pattern. On gathering information and validation
for such points confirms the analyzer to pass an order or get it reviewed by bank if possible
or else hold if a need for documentation shall suffice the deal. The red flags of having
concerning payment modes something which can be generated virtually or a risky country
combo or other mentioned details turning not in favor will surely push the suspicion
towards frauding the customer.
 What Suspicious Score: - Derived after the detailed analysis of credit cards or any card
being used in general with respect to the order being placed and how much of risk it carries
gives the fraud score for the same and thus is red flag for the analyzer.
 Combination of fraud Indicators:- These signs speak for themselves and give out a quick
confirmation as to what decision to make – weird and suspicious names or email handles
like 12hii@hotmail.com , weirdo123@gmil.com to others , IP address which are made up
or fake to mask the actual IP, virtual phone numbers ,risky country combinations which
either aren’t possible or fall in the list of restricted zones for the particular ecommerce
website . Immediate and bulk buyers buying random stuff, order velocity within a week or

34
a month, address monitoring tool to verify the locations of the customer or scamming
fraudster, discrepancies in the digits entered of the card number or the incorrect card
number entered, transactions going beyond a certain limit to flag concerns, gift cards being
bought extensively or payments being made through it.
 Logins through trustworthy points: If a customer comes through his/her social media
login he /she must usually is a legit customer since his/her friends and family must also be
in the same list it’s a login through you can validate the same and thus trust him/her more.
 Payment Modes : If a customer comes through legit payment method like bank cards or
credit cards which are universally acceptable or even legit in his/her country that builds
trust instead of customers coming with virtual cards or e-cheques which are not only
suspicious because they may be fake or make take time in encasing and thus it not
trustworthy .
 Addresses Mentioned may be mismatch: Shipping address usually are a match to the
billing addresses but sometimes may be if the item is a gift or if the customer can a fraudster
as well then the shipping address can be anywhere on a road or a totally new address which
has no connect with the billing address which is usually linked to the bank.
 Same IP Range /Public IP Range or Same Credit Card : At times fraudsters might be
approaching from same IP range and nearby addresses or using the same credit card for
placing order which is usually a tell of their scamming .
 Same name and different surnames: Usually people related to each other are staying
nearby or related through surnames or common family name but often fraudsters make
multiple accounts on multiple portals of international commerce website with different
surnames to confuse the analyst of their fraud game.
 Bot Attacks:-are common way to get login into open or already logged accounts of old
customers for fraudsters.
 Grammatical or Typo Mistakes: Such mistakes in names, email ids or addressees are
deliberately committed to resemble a genuine customer but are actually a scammer move.
Losses Caused Due to Frauds: - Scammers come with an agenda in mind to cause loss to the firm
or the customer and the majority of losses caused are those to the firm since it is the party acting as
an interface between the fraudster and the customer. The trend shows majority of ecommerce firms
suffered billions of charge backs which were never recovered since the fraudsters were never caught.
Among them the top reasons for charge back occurrence tend to be frauds or no clarity about the
authorization or cancelled billings of orders in a consecutive format, items ordered but never got
delivered , charges for wrong item ordered or for late delivery of goods.
Some Patterns which often get confused as Fraudsters but are Legit:-

35
 Deliveries near school or college: - In this case the configuring IP address or the billing
address is of the school /college or university since the orders are usually being placed by
the students.
 Government Office as the Address: Such deliveries are more common to governmental
departments and thereby can be fully trusted.
 Brazilian Customers: They are wealthy and often travelling customers and thus they
usually like to get items delivered to their hotel rooms which might include toiletries or
other daily utility items.
 Travelling Professional : Such customers are often travelling and thus the IP addresses at
times can be similar or the company credit card might be used by a couple of employees
of the same firm for placing order , in this the billing address and the shipping address will
that be of an office or business area.
 Corporate Pattern: Here orders are placed in bulk like for stationary or other similar items
for the usage of office use.
 Reseller or Re shipper:- This person may have many shipping addresses on his/her
account but the billing address shall remain constant , he /she must be buying from
ecommerce and selling on the other ecommerce to earn greater profits .
Challenges Faced By Ecommerce in Confirming a Scammer:-
 Carrying out an authorization for confirming the identity of the customer
 Time consuming payment methods which often are riskier and can end up becoming a debt
or a charge back
 Confirmation from the customer regarding the delivery of the package ordered
 Verifying the address too is a cumbersome as some addresses are aren’t rectifiable on Google
or any specific location finder tool
 There’s hardly any chance to get back the merchandise from a fraudster
 At times some countries might be risky for some ecommerce websites but not for others and
the outcome might prove detrimental for the one which is preferred no restrictions on
countries or regions
 Some cards or payment methods are not accepted by every ecommerce website owing to some
company specific guidelines which can again turn as a never returning loss for the firm .
 Lack of specific tools and trained professionals and software’s to keep a check on frauds being
committed.
 Just like genuine customer a fraudster too can fake and write reviews for the products he/she
even hasn’t purchased to create a trust on his account.

36
Fraud Prevention Techniques:-
One a firm has identified the risk its business runs in being exposed to the frauds and abuses a
scammer can perform and the consequences it can have on the business revenue and profits and the
operations of the firm carefully steps in prevention and elimination are searched and depending upon
the severity and the patterns of the frauds .
 Some practices can be adopted by almost all ecommerce business to make their transactions
secure and reduce the exposure to danger – one such thing is becoming PCI compliant which
offers security to the data of the customer while a transaction is being performed since the
payment gate way have firewalls and the login details are constantly updated for their
networks and even customers are advised on updating their passwords to avoid any attacks.
 Redesign the policies to adhere fraud tackling guidelines so as to ensure easy prevention of
loose end criminals and also extend the same towards handling products, providing services
and the merchants who are serving the products must also go through a background check to
ensure their validity.
 Ensure some small steps like taking assurance from the customer that the package has
delivered through mail or app if the firm has an application built for the site apart from the
physical signature. Allowing payments from certified and trustworthy e-wallets approved by
the government of the particular country or universally acceptable ones. Failed transactions
a customer have must be limited in order to prevent any scammer trying to engage in the
harm through such ways. Maintaining a restriction list for the way so payment modes
/locations /products specifically ordered /supplied by or to some countries which might be
hazardous or riskier in terms of shopper’s preference doubting concern.
 Never ever abstain from regulating the process of the website to have procedures running
under control and as prescribed by the rule book. This can be carried out both through
artificially training a software to do so and doing regular manual checks. Always look out
for any unusual behavior or discrepancies in the usual behavior of any customer be it through
the order velocity and product velocity, or ordering the certain items which might be riskier
buys or unusual buys for a first time customer, check on their social media profiles if or not
it is linked with their email id to establish trust over the customer, are somehow related to
any other customer who is old on the ecommerce website which too be a trustworthy sign.
 Check for the names of the customer, their address location is it traceable to an actual existing
location or there’s nothing popping up for the mentioned street and block. How frequently is
customer buying products from website, post receiving the desired goods how is his/her
pattern in case of faced with a faulty or tampered product is he demanding a replacement or
is he/she asking for charge back . How often does he./she asks for replacement is there a
pattern showing , does thus customer have accounts on the different countries portals of the
same website .The configuring Ip too says a lot about it if a customer orders from the same
IP it can be his/her home or residing address or in case of fluctuating IP what is the frequency
of fluctuations and does the billing and shipping address change as well.

37
 Are orders being requested for quicker deliveries constantly or they prefer standard free
deliveries. Do the amount of cards being used to make transactions keeping changing and do
they match with customer name or surname to establish valid relation or is there a sense of
suspicion cropping up from it.
 At times a customer might appear totally genuine on the screen and details might also might
match up but one small detail might crop suspicion and can lead to indecisiveness and thus
in such situations either calling up the customer is great help and asking some verification
details to establish trust can be great or else contact bank for verification or delay the
shipment for checking out the customer reaction a genuine will definitely ponder over it and
might call or write back.
 Making website more secure to offer scammers and hackers a tough time trying to cause
scam or harm will definitely go a long way. Consulting a web expert over the same matter is
essential to garner much needed advice as to how to make the website user friendly as well
as secure pathway for shopping of goods or service being provided.
 Installing or using software or tools for locating locations and validating a genuine card is
being used are some of the common mentions being used by the organizations quite
extensively.
 In case the website cannot offer a secure payment gateway contacting payment vendors
which can offer the same is also a great option to consider in safeguard the interests of the
parties involved in transactions.
 Storing data too can expose it to losing it in case of corruption experienced by the system or
the data itself. Since the customers payment methods exposes his card details and leakage
can cost millions and billions thus keeping it with the website is riskier and option and thus
maintainanance of data by the bank is much better.
 Using the most updated tools or software for performing the functions in relation to the firm’s
online website is not essential but also wards off the unnecessary attacks which are often
prone to systems which are still working on the old models
 Special Fraud tracking and tackling software and tools are constantly being made in the
market which do sell on the higher but have full proof protection to offer and can be updated
regularly to avoid fraudsters to getting accustomed to easy and unprotected zones.
 Employees working too should be asked to update their passwords and login details from
time to time and maintain precaution as to what to document and what not. Also ensuring
safety while surfing though the internet and how to keep mail service only operable within
the office systems and not to be used for personal or outside office work to ensure full secrecy
of the data and process as well . In fact employees must adhere from disclosing their work to
outside world like family and friends and also not carry systems to home.
 Asking employees to keep their personal devices like mobiles, iPad or others in company
lockers is also an essential part of the scenario towards maintaining full security.

38
 Consumers logging into the websites of ecommerce business must be asked to link their
mobile number to authenticate themselves or the email id linked with bank should be used
to operate the sites.
 Careful analyses of the device configured to being used for carrying out the transactions with
ecommerce website from the customers end must also be checked thoroughly to monitor if
or not the device was ever used to commit a crime in the past or has history of such situations.
 Tracking the location of the device through which the transaction is being done should a
priority to check and monitor if the same location pops time and again or it’s always a new
location and does the IP change with the location too or there’s a masking on it.
 Having fingerprints authentication for websites or phone built application of the sites in order
to have a much more authenticated data for the customer.
How to Decide on a Fraud Preventing Tool:-
Before spending money on choosing a software or a tool to give ultimate protection against fraud
one must understand the characteristics and features to check in the software.
 Is it fully automatic or a semi-automatic:- Is the business looking for a fully automatic or
a software which learns from the analyzers managing the transactions manually depending
whatever is the business requirement and budget the variant will be available to choose
from.
 Specific fraud handler or variety of cases can be handled: Since fraudsters can devise
innumerable methods to come and scam the customer or the website thus choosing the right
software is necessary and the latter is better as it offers in detecting a variety of ways.
 Number of Protection Layers: - Each layer of protection is a validation with regards to the
customer coming on the website and his /her credentials being checked up for
authentication and thus greater the layer of protection lesser will be the frequency of
fraudster trying to invade the system.
 Always Rely on the feedbacks :- Just like shopping on a site is often suggested by friends
and family and thus customer arrives there , when buying the fraud detecting software
making sure to read reviews and feedbacks is great help in understanding the working of
that particular software and whether or not it is worth a buy .
 Is the software compliant with the international security standards and the government
pertained standards to track the fraudster.
 Is it costly or budget friendly, does it offers a variety of plans to choose from in order to
have better choice of the services being offered?
 In case the firm encounters an issue with the software is the company selling the software
available 24/7 *365 to offer seamless help and assistance remotely and physically as well.
 How the software does handles cases of false declines with genuine customers or a manual
intervention is needed.

39
 Since most customers love using ecommerce websites from their cell phones what
protection does the software offer for such cases?
Prevalent Prevention Tools:-
 Signifyd: - This one of the most preferred options to protect data and also keep a close check
the fraud behavior. It also offers the option of either choosing specifically signify team to
handle the fraud or the firm trained professionals to dive in to fight it. It basically provides
scores to the transactions based on their likelihood of what is might look like and post that it
makes a conclusion as to which is to be flagged as a fraud transaction. It also offers charge
back insurance to the ecommerce firm in case of fraudsters trying to gather the goods post
either terming the transaction invalid or hacked account or claiming the good to be faulty.
 Sift Science: - It is little expensive plan towards protection from fraud and thus is available
in range of amounts depending upon the extra feature or benefit being availed. The money is
charged for detecting any account take overs, fraud transaction respect to payment and in
case the account is not genuine as well. The wide variety of protection it offers makes a rave
among the huge stores which can easily afford it.
 Simility: - This tool offers fingerprint matching between devices by tallying the information
linked with the fingerprint and thereby comes handy for authenticating a customer.
 Dub Zapper:-Another software tool which not only performs fingerprint authentication but
also tracks duplicate accounts and fake ones as well.
 Kount: - Unlike the other choices listed above this one is a package deal since it offers a lot
of benefits like tracking all kinds of fraud with artificial intelligence as it base and also
performs the check within few milliseconds thus saving time and money.
 SAS based software for fraud detection is designed using vast arena of information be it
from the experts , models operated for solving mathematical problems , understanding the
subject’s nuances in almost all scenarios .
 Iovation: - This is based on providing device authentication and other solutions for
authenticating the customer data it is usually sold under two main software’s Fraud Force
and Sure Score.

40
If you’re Ecommerce Experiences a Fraud Hit:-
Even after adopting the prevention methods and manually checking for frauds as well there’s
always chance of fraud striking the ecommerce so if that happens how to tackle the situation is
what matters in such dire time.
Since saving a customer is always essential thus start collecting data about the transactions where
there’s an unknown pattern being seen , check the sign ins changing, IP changing , look for address
discrepancies or change in billing or shipping address , payment cards if altered or suspicious cards
are suddenly being used . If the scammer received the package then the delivery must have
garnered his/her e-signature which is a documented proof of the fraudster and check for camera’s
in the area where the delivery was made to .All these evidences are valid to proof to be presented
in the court and get justice granted for the same . Although every country shall offer preventions
laws against cybercrimes and ecommerce related crimes as well but in case of international
fraudster catching him isn’t possible and also the amount generated will also decide if it is worth
fighting for in the court and going ahead with the case.
Even then taking the maximum possible measures at one’s own end is always beneficial in case
the authorities don’t prove of much help.

41
Chapter 8
How Are the Major International Ecommerce Players Protecting Themselves
from Frauds? :-
Amazon.com:- It uses Amazon Sage Maker which is an Amazon Web Service Solution which
is based on Machine Learning Algorithms and can help solve a variety of problems and also helps
in detecting credit card related frauds. These algorithms can tuned to suit the purpose the
ecommerce wishes to solve since the solution being used has the capacity to learn from the
personnel involved in the analyzing the fraud .The best part of using a Machine Learning
Algorithm is it helps in executing the technique on any automated transactions and also detects
any suspicious activity it feels needs a review. The architecture of this solution works in the
following way: - There’s amazon cloud template which introduces a set of credit card transactions
which are contained in a bucket called the simple storage service bucket and sage maker which is
a machine learning solution and which make uses of this data set to further act upon and detect
fraud. There is also a amazon cloud watch event which is created even to activated to go on for
every minute. This event further releases lambda function which calculate the transaction from the
set of dataset and then activates the sage maker to detect the transaction for fraud. The sage maker
runs on ML and it runs its operations on this transaction to detect the fraud if there then it is red
flagged otherwise sent to the kinesis data firehouse to further put the already processed transactions
into the bucket again this time for storing in the memory. Now that the processed transaction have
been loaded into the bucket they can be further be used to analyzed and do testing of the queries
with the amazon quick sight tool and for visualizing the queries and make inference of the outcome
.Now since here the processed transactions work as an data dump for the program to learn and
work on but ecommerce firms looking forward to use can make their own data set to use as well.
Amazon Sage maker: - It helps in fully developing and managing the machine leaning models
and train them as per the user’s demands and needs, with the capacity to create your own algorithm
and make it as though it can work for your suitability to make projections and forecasts. It also
provides feasibility to train and prepare the models to execute quickly.
Amazon Simple Storage Service:-It’s a service built primarily for storing data securely in huge
amounts to be later used for carrying out various tests and checking their performance as well. Not
only bigger and smaller sized firms can make use of it but its built to offer easy to use managing
features which allows to further process data to be used and meet the need and desire of the firm.
It can store lump sum amounts of data with durability to last a lifetime. The advantage if offers
over its competitors is being adjustable to size data and effectively perform plus it is in the budget
and world class security to offer.
AWS Lambda: - This allows to make your own code and run it and there are no charges in case
your code doesn’t runs or compile. It allows to make and run the code for any application one may

42
wish to choose and make. In fact all one has to done it make the code and upload it on lambda and
it will do it magic of executing it and scaling it to run correctly.
Amazon Cloud Watch:-Is a service which provides the control over the findings to data scientists,
engineers, devops engineers and etc. It allows a person to understand their process with much
better insights and monitor their work with maximum resource allocation and operations which
are easy to execute and manage and integrate performance to suit their likeability .The data which
is put into the cloud watch may consist of the following formats:-in form of log, metric system or
an event based which is great for running applications in the available formats and also for
detecting any unknown behavior
in the application, one can automize and visualize their work and even manage any issues which
might interrupt the smooth working of this service.
Amazon Kinesis Data Fire hose:-Is another weapon in the belt of the varied resources listed till
now, which is categorically allowing to put data in to lakes, or store it or simply analyze it using
the varied tools available in this deck. The data here can be used to make do anything before storing
it into the bucket made for storing. The feel of performing a real time analysis is what this service
offers and it allows manages to make the data sizeable to match the operation being performed on
it without any prior settings to be made. Once can compress data or further encrypt or decrypt it
before putting up into the storage. The amount of time it takes to stream and load data is hardly
few minutes which is boon in this industry.

43
Alibaba:-
This website uses big data technology for managing the risk induced through fraudsters lurking
the online store. The technology is built to capture and analyses in real time situations and also
helps in making the firm design certain risk models. This way the ongoing transactions are flagged
immediately using the ML algorithm and thus it saves time and improves efficiency of the
ecommerce store. It not prevents the customers coming and shopping on the website but also the
firm from charge back situations. Apart from that the firm itself has designed a product for anti-
fraud product to be bought by the customers called the Ant Buckler. This in-house product of theirs
is designed to detect and protect the system or the area where ever it is installed or uploaded from
any malicious software’s or programs for banks and online stores or sellers. To understand big
data – it is a complex data set which is haphazard and too bulky to be managed manually so big
data helps in the management and making sense of it since it is compiled with a surmountable
techniques to understand data make conclusions and compile it to be used for a lot of tasks or
programmes to be made. It can be used for fraud detection, display advertising online, analysis of
social media platforms, monitoring and controlling of Bpo centers, vehicle traffic management to
begin with. With growing business Alibaba has further worked in making another advancement in
the field of fraud risk management. A real time based system is designed to detect frauds in the
payment process – CTU (Control Terrorist Unit). This CTU is made to monitor the accounts and
the behavior of the customers and search and find the suspicious things going on and accordingly
take action. The great thing of the system is it can adjusted to manage as the suitability required
by the firm and levels of detection and prevention can increased or decreased. The level of
protection and security offered at Alibaba ecommerce platform extends towards customers and the
merchants as well since the amount of data it manages is a compilation of Taobao, Gaode Maps,
Tmall, Alipay and etc. The another fraud risk management offered by Alibaba is a five layer
prevention framework which is categorically made for Alipay customers which consists of
checking of accounts and monitoring them, plus checking the devices using which the orders get
placed, along with supervision on the account activity and techniques for risk management and
monitoring and definitely reviewing by the fraud analysts. RAIN is another model designed by the
firm which is executing and measuring the threat level of the activity being performed, identifying
the customer and the network being used to do the activity. This model make use of hundreds of
variables in order to understand the current position and the way a particular customer is
conducting himself/herself on the platform through his/her shopping pattern .The score is then
generated using the aforementioned parameters and make use of these variables which now carry
some value associated with them . A logistic regression Machine learning algorithm is used to set
the weights of the variables as the dimensions of the three main driving forces namely:-Risk of the
activity, network and identification.

44
Priceline:-
The next one in the brigade of opting for fraud detection software is Priceline. It has tied hands with
the leader in fraud detection – Forter to fight back the scammers for the protection of their
customer’s data and protection of their website business. Forter prides itself in offering protection
not just to the customer’s engaging with ecommerce website but also extends the secure
environment to the sellers providing the merchandize. In making the selection for Forter as their go
to firm Priceline has the following objectives in mind – constant guarding of customers and their
transactions. The rising trend of fraudulent activities in not across the USA but across the world has
spiked concerns for customers and merchants and the ecommerce business holders.
As per the data compiled by Fraud Attack Index-a product of Forter online travel agencies are more
exposed to frauds and thus require immediate protection from it. The devised fraud detection has
been engaged in tracking frauds and abuse patterns and also contributing towards enhancing the
customers experience with the online agency. With the help of latest machine learning technologies
at hand Forter provides constant supervision to accounts of the customers and also to the ongoing
transactions which combined with the expertise of the talented and knowledgeable team of fraud
analysts and detection team to enhance the security on site and beyond. The experience is offers
Priceline is simply spectacular as the processing of detection and flagging a transaction happens in
milliseconds and doesn’t bothers to interfere with the functions going on .
The deal in targeting the online travel agencies is that customers are booking just before hand some
of them have eleventh hour plans as well and thus purchases and bookings happen swiftly and since
there isn’t a requirement of shipping address thus the frequency of a transaction being operated by
a fraudster runs tremendous high. Priceline has been benefited by their services in reducing the
amount of charge backs and experienced a rampant increase in their sales due to the smooth
experience for their customers. The amount of automation and accuracy and speed the Forter
provides remarkable and unmatchable. They help in eliminating the delays caused by manual work
in reviewing and detecting and the Forter software adjusts itself to suit the availability and the risks
occurring within a business unlike a stringent detection software which can’t be tailored. Forter
offers a 100%guranteed protection with their software and any charge backs shall be fully
reimbursed. Another feather in their glory is offering solutions which can be tailored for all kinds
of market places operating in the globe and no bar in the currency as well. The sensitivity they offer
in detecting the different fraud patterns across nations and borders is splendid. Their chargeback
assurance covers all kinds of cards and all kinds and patterns of charge back scenarios.

45
JD.com:-
The China based ecommerce biggest player has come in collaboration with Experian to prevent and
detect frauds for its online business. The solution offered by the leader if information services
Experian is Fraud Net which is tailored to suit the needs of JD in combating the scams. Fraud Net
has helped in detecting a fraud before it actually happens by evaluating the behavioral patterns of
the shoppers coming on JD.com.
Fraud Net has made in very detailed manner to give the online business a seamless experience
without hampering their ongoing processes. It has multiple layered approach within the solution
which is swift and accurate and can be adjusted to suit the risks that a particular business encounters.
It allows a thorough analysis of the entire processes of the business so as to take in all the factors
which might be at risk and may be responsible for causing the hazard. It also has the feature of
keeping the track of the loyal customer bases in order to keep their accounts safe and sound.
The wide range of benefits offered by this fraud detection solution are the following:-
The losses are reduced to bare minimum:-The capability of the solution in finding the frauds is
so accurate that it unbeatable.
Customer Experience is enhanced: – Since the false positives are absolutely eliminated and more
and more customers are served with better experiences it’s there by promoting in retaining the old
customers and opening the doors to the new one.
Known to Drive Scammers Home:-Since the protection is so secure and perfect that fraudsters
have no choice but to go home empty handed.
Increased Productivity of Operations: - Since now there isn’t any barrier to the operations being
performed thus they are outperforming their functions and that too in lesser durations.
Components of Fraud Net:-
Device Mechanism:-The solution is one that having no tags or cookies in it which has improved
in giving the customer a better and fraud free experience. The information of the device and the
storage of its information obtained is being monitored by the internal system and specific ID gets
generated for each device event that takes place making their tracking easy. The system or the
component engaged in collecting and storing the data is smart and efficient in collecting almost all
characteristics of the page being viewed or detected, which is further collaborated with HTTP
headers. The TDL-Time Differential Linking helps in greater and better experience with
administering the device in use.
Mobile SDKS:-The SDKS is catering to enabling in device identification at mobile level devices
since there has been a rampant increase in the amount of mobile devices being used for operating
the ecommerce sites and since Ios and Android are two different technologies thus tracking differs
a bit and also the team of Fraud Net works on making and getting newer versions of the software’s.

A detailed study on fraud analysis of international trade on ecpommerce platforms

A detailed study on fraud analysis of international trade on ecpommerce platforms

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