Telephone fraud or communication fraud is the use of telecommunications products or services to illegally obtain money from a customer’s payment while not paying that amount to the telecommunication companies.
The scammer pretends to be a government agency or someone you trust to convince you by being friendly and helpful, or conversely, threatening and trying to scare you off. Below are the most common examples of phone fraud:
- Extended warranty: Scammers know when your customers bought the car and the type of car to urge them to buy worthless services at a price.
- “Free” trials: Scammers promise free trials but use the information to sign you up for one or more other products or services. You will have to pay monthly fees until you find out and cancel them.
As a store owner, you’ll incur costs and negatively affect your revenue when fraud occurs on your online store. First, you’ll have to process a chargeback for real customers and a chargeback fee (including transaction and processing fees). While the chances of you getting that product and transaction amount back from the scammer is very low, you lose both revenue and customers.
That’s why detecting online retail fraud as early as possible is the highest priority.