Posted on: 29 April 2021
What are the risks when running an online shop?
Due to the COVID-19 pandemic, many businesses have moved their retail businesses online, with many finding it a cost-effective method of running their business, and a model that they will likely continue to use even when the pandemic finally ends.
However, running a business online also comes with its own unique set of risks that you will need to navigate to run your business successfully. Take a look at some of the risks that we have identified and how you can manage them.
Common risks in e-commerce
When selling products online, these are the most common risks for businesses:
- Hackers stealing account information
- Site information theft by hackers
- Customer disputes
- Deliveries, logistics and returns
- Consumer contracts regulations
- Website reliability
- Privacy issues
Implement an authentication system
With the right control measures put in place, cardholder identity, and transaction validity can all reduce the chances of fraud and customer disputes. These are some of the ways that an authentication system can help prevent fraud.
Address Verification Service
This system checks a credit card holder’s billing address with the provider of the credit card. This check indicates that the credit card holder is making a valid transfer.
Card verification value
These are numbers that are printed on the back of a credit card and can be checked with a customer to prove that they have a genuine card.
This measure examines a transaction and works out the risk associated with each transaction, providing business owners with a score that can be used to identify whether or not the transaction is genuine or fraudulent.
A chargeback is a transaction that is returned at your own financial liability. They create expenses for businesses through processing time and a potential loss of revenue.
Chargebacks happen because of:
- Customer transaction disputes
- Authentication issues
- Inaccurate or incomplete transaction information
- Processing errors
If a cardholder disputes their transaction, they will usually ask for a copy of the receipt. To avoid a possible loss, send a copy of the receipt to their card provider at the earliest convenience.
Train your team
Credit fraud and chargebacks are something that your team should be aware of so they can remain vigilant against these kinds of activities.
Make sure that your team is also aware of your business’ risk management policies and procedures.
Retail insurance with Premierline
A retail insurance policy from Premierline is designed to give you insurance cover to help protect your business in the event of a disaster. However, if you are trading online you may need to consider e-commerce insurance.
If you are unsure of your insurance requirements, give us a call. We understand that businesses have different insurance needs, which is why our insurance experts are on hand to advise on the best insurance covers for your business.
Get in touch today we can help find you a competitive, no-obligation quote.
Source: Zywave Inc - Retail Risk Insights: Handling E-Commerce Risk
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The information and tools contained in this guide are of a general informational nature and should not be relied upon as being suitable for any specific set of circumstances. We have used reasonable endeavours to ensure the accuracy and completeness of the contents but the information and tools do not constitute professional advice and must not be relied upon as such. To the extent permitted by law, we do not accept responsibility for any loss which may arise from reliance on the information or tools in our Insight Hub.