Electronic Fraud

Apart from the major political, economic and social issues being faced in the country. There is one big issue that many of us overlook, this is online fraud more specifically, in the e-commerce sector.

Online/electronic fraud by definition is any type of fraud scheme that uses email, websites, or any internet related means to present fraudulent solicitations to prospective victims, to conduct fraudulent transactions, or to transmit the proceeds of fraud to financial institutions or to others connected with the scheme. This electronic fraud can simply denoted as E-fraud

Traders, buyers and sellers, in the online space are the mostly affected by this. This is because they use online payment systems that could be susceptible to cons as seen below:

Non-delivery payment/merchandise:

A buyer does not receive the items ordered, or a seller does not receive payment for items sold. Additionally, if the buyer pays by credit card, the seller obtains his name and credit card number and can use this data as vehicle for credit card fraud.

Credit card fraud:

A credit card fraud occurs when someone gains financial or material advantage by using a credit card, or information from a credit card, to complete a transaction that is not authorized by the legitimate account holder.

Overpayment fraud:

An incident in which the the victim receives an invalid monetary instrument, e. g. a cheque, with instructions to deposit it in a bank account and to send excess funds or a percentage of the deposited money back to the sender.

From this, buyers are likely not to get value for their money, the sellers make huge losses due to defaulting customers and also the buyer’s personal information (credit card details) could be at risk of being exposed to the wrong parties.

Even though the government has been trying to curb the issues through revolutionizing financial and digital laws, there is still a gap. Organizations in the private sector have also had their part to play. Their attempts have been through: identity detection, network security measures, having strong passwords and a method that is a bit new in the market, online escrows.

We lose up to 5 million Kenyan shillings due to online fraud, join me next time as I discuss on escrows and their role in trying to solve this problem.

Article by Maureen Wakagwi