Anti-Fraud System in E-commerce: How to Install It?

The anti-fraud system in e-commerce is simply fundamental for a good operation. So much so that, in many cases, they already come integrated with payment gateways.

Online sales are always at risk of payment fraud, which can happen in various ways.

The job of an anti-fraud system, as its name suggests, is to perform simple checks that significantly reduce a fraudster’s chances of success.

Generally, these systems operate by comparing the information provided by the user during registration with the credit card details used for the purchase.

This way, they determine whether the purchase request is legitimate or the result of card theft, cloning, etc.

But it doesn’t stop there. Today, we will delve deeper into anti-fraud systems, seeking to understand:

The most common types of fraud in e-commerce;
The main strategies of anti-fraud systems;
The best anti-fraud tools available on the market;
What happens with false positives?

Are you ready? Then let’s get started

The Most Common Types of Fraud in E-commerce

There are various types of fraud in e-commerce, and new ones emerge every day.

Frauds range from simple ones, such as data theft from the dark web, to more complex ones, like triangulation scams.

There are also cases that happen within families, like a child using their parents’ credit card to buy a game, an item, or even a product.

The magic of an anti-fraud system for e-commerce is that it recognizes all these fraud possibilities and evolves with them.

Thus, an anti-fraud system operates in two ways: identifying potential fraud is its primary concern, followed by verifying the data to either approve or block the purchase.

But we’ll discuss this further in the next section, where we’ll understand how an anti-fraud system truly works.

For now, check out this list of the most common frauds in e-commerce:

Family Fraud — Very Common

The most common type of fraud in e-commerce is family fraud, which does not involve criminals or professional fraudsters but rather people within the same family.

This is the case we mentioned earlier—when a child takes their parents’ credit card to make an online purchase.

In such cases, the anti-fraud system analyzes the card’s transaction history and requests additional verification to confirm the buyer’s identity.

Even though it is the most common fraud, it is also the hardest to block. Since everything happens within the family, it is much more difficult to detect unusual behavior, and fraudsters have ways to bypass identification mechanisms.

Security questions, for example, are easily answered by fraudsters who are close to the victim. Social engineering, which is impossible to prevent at a system level, is also commonly used.

Leaked Data (Clean Fraud) — Common

We live in a highly complex era for data security. Data breaches happen constantly, often without us even realizing it.

In fact, it’s even worse—we usually don’t even know what data is being stolen.

In this type of fraud, scammers access databases of stolen information and use it to make purchases.

The complexity of these cases varies widely. Victims who had their credit card details leaked fall prey to card cloning, for example.

Meanwhile, those who have their national ID (such as a Social Security Number) stolen may suffer from different frauds unrelated to e-commerce.

Anti-fraud systems tackle these cases by analyzing purchase history and blocking consecutive or unusually high-value transactions that seem atypical for the victim.

It’s important to note that in these cases, the financial loss falls entirely on the e-commerce business if the merchandise has already been shipped.

But there is another variant of this scam:

Merchandise Interception — Uncommon

In this type of fraud, the scammer makes a purchase using someone else’s data and initially requests shipping to the victim’s address.

However, after completing the purchase, the fraudster requests a change of address to their own location.

This fraud is not very common because it is not particularly effective. Not all e-commerce businesses allow address changes after shipping, and this request itself is highly suspicious.

Anti-fraud systems struggle with this type of fraud, but it falls into the same category as stolen data—purchase history and suspicious behavior patterns are key factors in detecting and blocking the transaction.

Self-Fraud (Chargeback Scam) — Common

One of the most common fraud types in e-commerce is self-fraud.

In this case, the fraudster is the cardholder themselves. They complete a purchase as usual, but once the item arrives, they request a chargeback from the credit card issuer, claiming they never received it—keeping both the product and the refunded money.

This type of fraud is particularly challenging for anti-fraud systems, as it is difficult to detect fraudulent intent at the time of purchase.

Even so, anti-fraud systems can identify patterns of chargeback behavior through credit card companies, flagging frequent refund requests in online purchases.

The fraudster’s first few attempts often succeed since the anti-fraud system has no prior record of their behavior.

However, as they continue scamming other e-commerce sites, their pattern becomes more evident and easier to block.

There is another fraud that shares some characteristics with self-fraud. Let’s discuss it below:

Interception Scam — Uncommon

This scam has multiple stages.

At first, fraudsters carry out self-fraud using different credit cards. In the next step, they create an online store with fake information and start selling the scammed products.

Sometimes, these fraudulent stores imitate well-known marketplaces.

To build credibility, the fraudsters initially deliver products to customers.

However, once the store gains traction, the final phase of the scam begins—selling products without fulfilling the orders.

It’s a game of trust. First, they build credibility. Then, they exploit it by making a large number of sales and not delivering the goods.

Eventually, these fake sites disappear. After making a profit, the fraudsters delete the website, create a new one, and continue their activities.

These are the most common frauds in the market today, but they are far from the only ones.

There are countless types of scams, and many have yet to be discovered by anti-fraud systems.

The key takeaway is that anti-fraud systems take a universal approach. They don’t need to be as creative as fraudsters—they just need to be highly efficient in their analysis. That is enough in most cases.

And since we are discussing this, let’s now understand how anti-fraud systems actually work:

How Do Anti-Fraud Systems in E-commerce Work?

There are three types of anti-fraud solutions on the market, two of which are directly related to payment processing in e-commerce.

Let’s first discuss these two types, which are integrated into payment gateways and payment intermediaries.

In these cases, the anti-fraud systems come built into the payment solution. You don’t need to hire an additional anti-fraud system, as it is already included in your chosen payment solution.

However, there are also independent anti-fraud platforms that can be added to your e-commerce alongside payment gateways or intermediaries.

The crucial point is that there is a significant difference between these first two types of anti-fraud solutions—a difference so crucial that it impacts the pricing of payment gateways compared to payment intermediaries.

Let’s explore these three types of anti-fraud solutions below, understanding exactly what they do, their advantages and disadvantages, and which one makes the most sense for your operation.

Let’s go!

Fraud Prevention Systems in Payment Gateways

This is the most basic way to implement fraud prevention in e-commerce, and also the cheapest.

However, precisely because it is a simpler method, it is not as reliable as others. You cannot expect your e-commerce to have zero fraud after installation.

Here, the system only works on preventive fraud blocking.

In other words: it performs analyses, which can be automated with AI or done manually, to detect whether a purchase is fraudulent or not.

These systems, despite being more basic, are far from ineffective. They simply have fewer options for dealing with fraud after it occurs and fewer detection resources than dedicated systems.

The biggest problem with payment gateways is that they do not take responsibility for fraud.

Think of this situation: someone commits a chargeback scam on your e-commerce store, purchasing R$2,000 worth of products and then requesting a refund, claiming the package never arrived.

For the payment gateway, there is nothing to be done. You were a victim of fraud and will have to bear the loss of the products you sold.

This is by far the biggest issue with fraud prevention systems integrated into payment gateways. But right below, you’ll see the main alternative to them:

Fraud Prevention Systems in Payment Intermediaries

Payment intermediaries work quite differently in this regard.

The fraud prevention systems in one or another may not have significant differences, but intermediaries offer an extra advantage: they take responsibility for the fraud, not your e-commerce.

In the previous example, the payment gateway does not attempt to resolve your fraud issue. It went through, and now the loss is yours.

Intermediaries, however, absorb this loss.

If you can prove that your product was shipped and that the transaction took place through the intermediary, they will reimburse you in the event of a chargeback.

This makes payment intermediaries more expensive than gateways, but the investment is worth it.

PagSeguro is a great example of a payment intermediary. It is commonly used for transactions on your site and has its own fraud prevention system. But beyond that, it also offers reimbursement in cases of chargeback scams.

But that’s just one example.

Independent Fraud Prevention Systems

These systems are much more complex than the ones we’ve mentioned so far and are contracted separately.

In most cases, businesses hire a gateway or intermediary that already includes a fraud prevention system and then hire an independent fraud prevention system as well.

That’s because not all independent fraud prevention systems also offer payment processing.

Payment platforms in this case vary widely. In the next section, we will list some of them along with their main features to help you choose.

The truth is, overall, fraud prevention systems for e-commerce are not that complicated.

What you need to do in practice is choose one of these platforms and contact them for installation.

All the technical aspects, digital infrastructure, data protection (LGPD compliance), and fiscal compliance are the responsibility of the platforms, which will align with you on the more complex details.

All set? Then let’s move on to the final part of the article: a mini-review of the main independent fraud prevention systems for e-commerce:

What Are the Best Independent Fraud Prevention Systems for E-commerce?

We will focus specifically on independent fraud prevention systems because the others come with additional factors that we will not analyze in this article.

In other words: independent systems are the only ones that can be judged solely on their fraud detection capabilities and nothing else.

While gateways and intermediaries may have great fraud prevention systems, they may also have terrible functionalities in other areas. To avoid confusion, we’ll stay focused.

Below, you’ll find a review of some of the leading exclusive fraud prevention solutions in the market, considering the following criteria:

Price
Features and functionalities
Complexity of implementation
Service reliability

Let’s go:

ClearSale

ClearSale is one of the best-known fraud prevention platforms in Brazil, offering advanced solutions for e-commerce, marketplaces, banks, and other sectors that need risk analysis in online transactions.

Its key differentiator is the combination of artificial intelligence, machine learning, and human analysis to ensure high accuracy in fraud detection.

Price: No fixed pricing available; pricing is personalized, varying according to transaction volume and service complexity.
Features and functionalities: Predictive risk analysis, machine learning, integration with fraud databases, manual review of suspicious transactions, and risk scoring for automated decisions.
Complexity of implementation: Integration via API and SDKs, requiring technical knowledge for proper configuration. Provides technical support and complete documentation.
Service reliability: Highly rated in the market, used by large companies, and optimized for reducing false positives without compromising security.

Konduto

Konduto is a fraud prevention platform focused on monitoring user behavior during navigation and analyzing purchase patterns to prevent fraud in e-commerce and digital payments.

Its innovative approach improves fraud detection accuracy.

Price: Based on the volume of transactions analyzed; exact values are personalized and provided upon request.
Features and functionalities: Machine learning algorithms, user navigation monitoring, real-time risk analysis, automated risk scoring, and integration with other fraud prevention tools.
Complexity of implementation: Relatively simple, with integration via API and plugins for various e-commerce platforms.
Service reliability: High accuracy in fraud detection, reducing false positives. Used by major companies in Brazil and well-regarded in the market.

Riskified

Riskified is a global fraud prevention platform that uses artificial intelligence to analyze purchases in real-time, particularly focused on medium and large e-commerce businesses.

Its key differentiator is its chargeback guarantee, meaning it covers losses in cases of improperly approved chargebacks.

Price: Based on a fee per approved transaction. Prices vary depending on transaction volume and business sector.
Features and functionalities: Advanced machine learning, automated risk scoring, chargeback protection, predictive analysis, and integration with various payment methods.
Complexity of implementation: Integration via API, with technical support available. May require fine-tuning to optimize accuracy for specific industries.
Service reliability: High precision rate and competitive advantage with fraud protection guarantee. Widely adopted by international companies and large marketplaces.

Signifyd

Signifyd is an internationally recognized fraud prevention platform offering solutions for e-commerce and marketplaces. Its major differentiator is chargeback protection, assuming financial risk in cases of fraud.

Price: Fee-based model per approved transaction, with customized plans according to sales volume.
Features and functionalities: AI-driven risk analysis, machine learning, risk scoring, chargeback guarantee, and real-time analysis.
Complexity of implementation: Well-structured API integration, but may require adjustments to fit different market niches.
Service reliability: Highly reliable, especially for companies seeking full security, as it covers losses in case of fraud detection failures.

CyberSource Decision Manager

CyberSource Decision Manager, by Visa, is a fraud prevention solution aimed at global businesses, with one of the largest fraud intelligence databases in the world.

It allows for advanced customization of detection rules and risk analysis.

Price: Custom pricing based on transaction volume and business needs; generally more expensive than domestic solutions.
Features and functionalities: Machine learning, customizable risk rules, integration with global fraud databases, and manual transaction review system.
Complexity of implementation: Can be complex, as it requires technical expertise to configure rules and integrate with other payment systems.
Service reliability: Extremely reliable, globally recognized, and used by major companies. Its extensive database enables high fraud prevention accuracy.

So, what did you think of our list and the insights into how fraud prevention systems really work?

If you have any questions, leave a comment. And beyond just questions—if you know more than we do about this topic, feel free to share your experience.

Most of the content available online about this subject is highly corporate. It’s rare to find real people, e-commerce owners, discussing the actual experience of using these platforms.

So, if you use fraud prevention tools in your e-commerce store, please leave a comment to help other merchants make a better decision, okay?

Thanks for reading, and see you in the next article!

Anti-Fraud System in E-commerce: How to Install It?