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How Well Are Your E-commerce Risks Managed?

E-commerce risks and cyber liability insurance

How Well Are Your E-Commerce Risks Managed?    

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How popular is e-commerce? Well, according to a recent retail survey cited by Business Insider, “e-commerce will make up 17% of all U.S. retail sales by 2022”.1 Regardless of your industry, the power of online sales of products and services is growing exponentially. And capitalizing on rapid growth and opportunity are unique e-commerce risks.

New markets, reduced costs and extended brand experiences are just some of the benefits that are driving e-commerce momentum. And while many Canadian bricks and mortar businesses are transitioning in part or whole to online sales, a Zywave Risk Insights notes that, “if you are considering expanding your business online, it is important to understand what is required in order to maximize information security and minimize credit card payment risks.

Related Matters: Business Insurance: E-Commerce will make up 17% of all U.S. retail sales by 2022 – and one company is the main reason

E-commerce sites that have few or no fraud controls in place can experience a chargeback rate of 10 per cent or more. It is important to understand the basics of credit fraud before opening up for business online.”2

What Risks Should E-Commerce Retailers Be Wary Of?

“Those handling transactions online should consider the following common risks:

  • Fraud
  • Account information theft by hackers
  • Account information theft on-site
  • Customer disputes”3

As well, chargebacks “are transactions that are returned as your financial liability, translating into extra processing time and cost in addition to possible loss of revenue. Chargebacks occur for several reasons, including:

  • Customer-disputed transactions
  • Fraud
  • Authorization issues
  • Inaccurate or incomplete transaction information
  • Processing errors

Related Matters: Information Age: The seven types of e-commerce fraud explained

When cardholders dispute transactions on their statements, they usually ask for a copy of the receipt, which you should provide to the card company as soon as possible to avoid loss.”4

What Can Business Do To Mitigate E-Commerce Risk?

“To avoid chargebacks, it is up to the e-commerce merchant to apply the right tools and controls to verify the cardholder’s identity and the validity of the transaction. When used efficiently, these systems can reduce fraudulent transactions and the potential for customer disputes.

  • Address Verification Service checks a credit card holder’s billing address with the issuer, providing merchants with an indicator of the validity of the transaction.
  • Card Verification Value numbers are printed on the back of credit cards and can help ensure that the customer is in possession of a genuine card.
  • Fraud Screening examines transactions and calculates the level of risk associated with each transaction, providing merchants with risk scores.

When cardholders dispute transactions on their statements, they usually ask for a copy of the receipt, which you should provide to the card company as soon as possible to avoid loss. Be sure your staff is aware of the risks of credit fraud and chargebacks. They should know the chargeback rules and regulations that your provider uses and be well-versed in your risk management policies and procedures.”5

How Does Cyber Liability Insurance Help?

You can take action to protect your business against e-commerce risks. Talk to us about your cyber liability insurance needs. Our insurance brokers can help you get a cyber liability insurance quote that delivers more value and options to your Canadian business.

For A Cyber Liability Insurance Quote Or For Questions Regarding Getting A Cyber Liability Insurance Quote Email quotes@alignedinsuranceinc.com Or Call An ALIGNED Insurance Broker Today At 1-866-287-0448

ALIGNED Across Canada   100% Canadian owned, ALIGNED is a premiere insurance brokerage that serves more than 1,400 clients across the country. ALIGNED’s offices in Toronto, Calgary and Vancouver are supported by a national operations centre in Cambridge, Ontario. Uniquely within the industry, ALIGNED creates, negotiates and delivers the best business insurance and risk management strategies/solutions to organizations like yours.


Sources:

1 Business Insurance: E-Commerce will make up 17% of all U.S. retail sales by 2022 – and one company is the main reason
2-5 Adapted from Risk Insights © 2011-2013 Zywave, Inc. All rights reserved.  This Risk Insights is not intended to be exhaustive nor should any discussion or opinions be construed as legal advice. Readers should contact legal counsel or an insurance professional for appropriate advice.
Information Age: The seven types of e-commerce fraud explained  

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