E-Commerce Fraud Trends & Tips: Argentina

Latin America continues to be a global hotspot for e-commerce retailers, thanks to rising internet penetration rates and more and more consumers going online. Argentina is no exception, with double-digit e-commerce growth rates.

But online retailers who are considering expanding into this market can’t go into it blindly.

We spoke with Alex Ormeno, a ClearSale sales representative in Argentina, to get his perspective on Argentina’s current state of e-commerce and the emerging fraud trends online merchants doing business there must be mindful of.

The Impact of COVID-19 on Argentinian E-Commerce

Because as many as 83% of Argentinians are leaving home only when it’s absolutely essential, says Alex, e-commerce growth is becoming more and more important to the country’s residents. So important, in fact, that Alex reported Argentina’s e-commerce presence skyrocketed from 7.6% in 2019 to 37% in just the fourth week of the pandemic lockdown. This 387% increase was primarily driven by sales in categories related to new lifestyle behaviors, including sales related to health and medical equipment, hearing devices, and nutritional supplies.

The pandemic has also driven an increase in online payments. Currently, 76% of the population, according to Alex, prefers online payments. And some online payment platforms are claiming a 40% increase in new customers, compared with the number of customers in 2019.

Top Fraud Threats in Argentina

As opportunities increase for cybercriminals to defraud innocent customers — both due to the COVID-19 pandemic and because of an evolution in technology — here’s what Alex wants you to know about e-commerce fraud in Argentina and your risk for being a victim.

Phishing and Related Attacks Continue to Be Popular

Phishing is one of the most common types of fraud being perpetrated in the country. These attacks occur when a customer receives an email that appears to be from a bank, credit card, social network or other trusted business and is asked to click a link to submit personal and confidential information (including passwords, bank codes and credit card data) to verify or reactivate an account. But when the customer clicks the link, they’re redirected a legitimate-looking (but fraudulent) website that captures the sensitive information the customer enters and uses that information to commit fraud. If customers don’t pay close attention to the sender’s address of the target of links, they can be easily confused and fall victim to the scam.

Because phishing attacks tend to be so successful, Alex predicts that fraudsters will continue to use social engineering techniques to trick customers into revealing sensitive information.

Additionally, smishing (via SMS) and vishing (via phone calls) will increase in popularity among fraudsters, with these criminals posing as bank agents or representatives of phone or cable services and tricking customers into revealing personally identifiable information. These criminals are also adept at perfectly recreating the interactive voice response systems of well-known companies. These fraudulent systems are expected to be so advanced that they’ll link to toll-free numbers and allow (and encourage) customers to use a phone keypad to enter their bank details and other sensitive information “to confirm their identity for their safety.”

Cybercriminals are Launching Malware and Ransomware Attacks

Not only are emails trying to drive legitimate customers to fake sites, but they’re also delivering malware. In these cases, fraudulent emails contain an attachment — often labeled as an invoice or billing statement from a familiar merchant. But it’s when an unsuspecting customer opens that attachment that the destruction begins: Spambots start harvesting email addresses for future attacks, malicious programs start capturing keystrokes or trojans install back doors that allow other malware into the victim’s computer. Other attacks may end with the attacker holding electronic data (ranging from email addresses to account information to personal files) hostage until the victim pays the cybercriminal a ransom.

Fraudsters Are Using Impersonation

Fraudsters are impersonating representatives from banks and governmental organizations like the Administración Federal de Ingresos Públicos or the Administración Nacional de la Seguridad Social. These imposters are offering to help unsuspecting victims collect their 10,000 peso Ingreso Familiar de Emergencia, which is designed to help those made economically vulnerable by the coronavirus pandemic. Instead, these fraudsters are harvesting bank account data from those who need help most, then selling that data online, using it to take over accounts and apply for loans online.

Other fraudsters are building fraudulent websites, e-commerce platforms and social media accounts that advertise the sale of medical products and prey on the fears of a worried public that’s trying to protect their family from illness. Alex said that he expects these same scams to extend to other products and services and take advantage of unsuspecting customers.

Account Takeovers Will Rise

Alex warns that he expects to see a rise in account takeovers, but he expects the target to change. E-commerce merchants, rather than individuals, may become the object of a cybercriminal’s attacks.

Cyberfraudsters Will Start Working Together

For cyberfraudsters to get the most bang for their buck, Alex expects they will start combining their efforts, sharing technology and information and using it to launch bigger, more advanced attacks on e-commerce retailers and their customers.

How to Reduce Your Risk of Fraud and False Declines

When it comes to actionable steps you can take today to reduce your risk of fraud and false declines, Alex suggests you consider outsourcing fraud prevention to a comprehensive solution that offers these four services.

1. Specializes in Red Flag Transactions

Having an outsourced solution reviewing each of your transactions can help you reduce your risk of revenue losses from card-testing fraud, friendly fraud and chargeback fraud. Look for one that doesn’t automatically decline gray-area transactions but that instead uses a team of trained professionals to analyze these transactions, preventing you from leaving money on the table.

2. Uses the Latest Technology

Solutions that employ advanced artificial intelligence — including algorithmic, predictive and behavioral models — are effective at protecting merchants. By integrating emerging fraud data with the outcomes of past decisions, these solutions become more adept at preventing potentially fraudulent transactions from being approved.

3. Covers Chargebacks

You also want a fraud prevention solution that offers chargeback insurance. This insurance is a 100% guarantee that covers the merchant if the fraud solution partner approves a transaction that turns out to be fraudulent and results in a chargeback. Should this happen, the fraud partner will pay the entire cost of the chargeback.

4. Has a Team of Trained Experts

Even the most robust machine learning solutions can’t effectively approve 100% of your transactions. Sometimes there are high-risk, high-value transactions that require an extra layer of review. Having a team of trained analysts at your disposal can ensure your most valuable transactions are being comprehensively evaluated to ensure you’re not losing products and revenue to fraudsters.

At ClearSale, we’ve rolled each of these services into our unique fraud prevention program that protects the revenue and relationships of more than 3,000 e-commerce clients worldwide. We’d love to tell you how our customized approach can protect you, too. To learn more, just contact one of our trained analysts today.