15 Ecommerce Fraud Issues Affecting Shopify Online Shops (2024)

Fraud issues on Shopify is an escalating concern, affecting numerous online shops and causing substantial challenges for e-commerce merchants. The landscape of digital fraud is ever-evolving, with cybercriminals developing more sophisticated methods to exploit vulnerabilities. From phishing scams and chargeback fraud to identity theft and triangulation fraud, these deceptive practices can lead to significant financial losses, damaged reputations, and strained customer relationships.

This article delves into 15 prevalent fraud issues that Shopify merchants are currently grappling with. We also provide practical solutions to each problem, helping you safeguard your online store and maintain trust with your customers. By understanding these common threats and implementing effective countermeasures, you can protect your business from the costly impacts of fraud.

Fraud issues on Shopify category 1: Malicious bots related issues

Issue 1: Credential stuffing fraud on Shopify shops

Credential stuffing poses a significant threat to online businesses, including Shopify stores. This attack method exploits weak security practices, leading to unauthorized access and potential data breaches. Understanding credential stuffing and implementing advanced security measures is crucial for safeguarding your Shopify store.

What is credential stuffing fraud?

Credential stuffing is a type of cyber attack where attackers use automated scripts to try large volumes of stolen username and password combinations on various websites. These credentials are often obtained from data breaches and sold on the dark web. The primary goal is to gain unauthorized access to user accounts by exploiting the common habit of password reuse.

Solution to credential stuffing fraud

To further enhance the security of your Shopify store against credential stuffing, consider implementing the following advanced measures:

1. IP Whitelisting: Restrict access to your Shopify admin panel by whitelisting specific IP addresses. This ensures that only trusted networks can access your store’s backend.
2. Geolocation Restrictions: Use geolocation services to block login attempts from regions where you do not conduct business. This can help prevent unauthorized access from foreign locations.
3. Bot Management Solutions: Implement bot management solutions such as Skyflare that can detect and block malicious bot traffic. These solutions use machine learning to distinguish between legitimate users and automated bots.
4. Security Audits: Conduct regular security audits to identify and address potential vulnerabilities in your Shopify store. This includes reviewing access controls, updating security policies, and ensuring compliance with industry standards.

Learn more about this issue: Protecting Your Shopify Store from Credential Stuffing: Advanced Security Measures

Issue 2: Distributed denial of service (DDoS) on Shopify shops

Distributed Denial of Service (DDoS) attacks are one of the most prevalent threats to e-commerce sites, including those powered by Shopify. These attacks can disrupt your business operations, lead to significant financial losses, and damage your brand’s reputation.

What is DDoS attack?

DDoS, or Distributed Denial of Service, is a type of cyber attack where multiple compromised systems are used to target a single system, causing a denial of service for users. The flood of incoming messages, connection requests, or malformed packets to the target system forces it to slow down or crash, rendering it inaccessible to legitimate users.

Solution to DDoS attack

1. Cloud-Based DDoS Protection Services: Services like Skyflare bot protection provides robust protection against DDoS attacks. These services can absorb and mitigate large-scale attacks before they reach your Shopify store.
2. Traffic Monitoring: Regularly monitor your traffic for unusual patterns that may indicate a DDoS attack. Early detection can help in activating mitigation measures promptly.
3. Rate Limiting and IP Blocking: Implement rate limiting to control the number of requests a user can make in a given timeframe. Additionally, blocking suspicious IP addresses can prevent malicious traffic from overwhelming your site.
4. Web Application Firewalls (WAF): A WAF can filter out malicious traffic and block attempts to exploit vulnerabilities. Shopify users can integrate third-party WAFs to enhance their store’s security.
5. Load Balancing: Distributing traffic across multiple servers can help manage high traffic volumes and reduce the impact of a DDoS attack. Load balancers can also help identify and isolate malicious traffic.
6. Incident Response Plan: Have a clear incident response plan in place. This plan should outline the steps to take in the event of a DDoS attack, including contact information for your hosting provider and any third-party security services.

Learn more about this issue: DDoS Protection on Your Shopify Store: Protecting Your E-commerce Site from Overwhelming Traffic

Issue 3: Malicious web scraping fraud on Shopify shops

Web scraping has become a common threat to online businesses, including Shopify stores. Competitors, cybercriminals, and data miners use web scraping to extract valuable product data and pricing information from e-commerce websites. This unauthorized access can lead to competitive disadvantages, price manipulation, and intellectual property theft.

What is Web scraping?

Web scraping involves the automated extraction of data from websites using bots or software tools. While web scraping can be used for legitimate purposes, such as data analysis and research, it is often employed maliciously to steal sensitive information. For Shopify store owners, web scraping poses several risks, including: Competitive Disadvantage, Data Theft, SEO Damage and, Server Load.

Solution to DDoS Attack

1. Implementing IP Blocking and Rate Limiting for Shopify Data Protection: IP blocking and rate limiting are effective measures to prevent web scraping by controlling the number of requests an IP address can make within a specific timeframe.
2. Utilizing Web Application Firewalls (WAF) for Enhanced Shopify Data Protection: Web Application Firewalls (WAF) provide an additional layer of security by filtering and monitoring HTTP requests to your Shopify store.
3. Protecting Your Shopify Data with CAPTCHA and Bot Management Solutions: CAPTCHA and bot management solutions are essential for distinguishing between legitimate users and automated bots.
4. Monitoring and Analyzing Traffic for Effective Shopify Data Protection: Regular monitoring and analysis of your website traffic can help to detect and prevent web scraping attempts.

Learn more about this issue: Preventing Web Scraping: Data protection for your Shopify store 

Issue 4: Bot signups on Shopify shops

Preventing bot signups to maintain the integrity of your Shopify store is crucial in the competitive e-commerce landscape. Automated bot signups can disrupt business operations, distort analytics, and pose security risks. These bots perform malicious activities such as scraping data, spreading spam, and exploiting vulnerabilities. As a Shopify store owner, it’s essential to implement effective strategies to combat these threats.

What is Bot Signups?

Bot signups occur when automated scripts or software are used to create fake accounts on your website. These bots can perform various malicious activities, such as scraping data, spreading spam, and manipulating your store’s metrics. The impact of bot signups includes: Skewed Analytics, Resource Drain, Security Risks and, Customer Trust.

Solution to Bot Signups on Shopify

1. Utilizing CAPTCHA for Effective Bot Prevention: CAPTCHA (Completely Automated Public Turing test to tell Computers and Humans Apart) is a widely-used tool to differentiate between human users and bots. Implementing CAPTCHA on your signup and login forms can significantly reduce bot activity.
2. Leveraging IP Blocking and Rate Limiting to Prevent Bot Signups: IP blocking and rate limiting are powerful techniques to control and limit bot activity on your Shopify store.
3. Using Honeypot Fields for Stealthy Bot Prevention: Honeypot fields are hidden fields added to forms that are invisible to human users but visible to bots. When bots fill out these fields, they reveal their automated nature, allowing you to block their attempts.
4. Third-party bot protection solution: For advanced IP blocking and rate limiting, consider using third-party services like Skyflare, which offer robust security features.

Learn more about this issue: Prevent Bot Signups in Your Shopify Store: Strategies for Maintaining Store Integrity

Fraud issues on Shopify Category 2: Click Fraud

Issue 5: PPC (Pay per click) click fraud on your Ads

PPC click fraud (Pay-Per-Click click fraud) is a growing concern for online advertisers, particularly for Shopify store owners investing in advertising campaigns. This malicious activity involves fraudulent clicks on ads, leading to wasted budgets and skewed analytics. 

What is PPC click fraud?

PPC fraud occurs when individuals, automated bots, or competitor clicks on your ads with malicious intent. These clicks do not represent genuine interest in your products or services, leading to wasted ad spend and distorted campaign performance metrics. The primary motives behind PPC fraud include draining competitors’ budgets, manipulating analytics, and generating revenue for fraudulent publishers.

Solution to PPC click fraud on Shopify

1. Identifying Unusual Click Patterns
2. Analyzing Traffic Sources for PPC Click Fraud
3. Implementing IP Exclusions to Prevent PPC Click Fraud
4. Utilizing Click Fraud Detection Software
5. Employing Ad Verification Services

By implementing robust detection and prevention strategies, such as monitoring click patterns, analyzing traffic sources, setting up IP exclusions, utilizing click fraud detection software like Skyflare, and employing ad verification services, you can safeguard your Shopify store’s advertising efforts.

Learn more about this issue: Detecting and Preventing PPC Click Fraud in Advertising Campaigns on Your Shopify Store

Issue 6: Competitor click draining to Shopify online business

In the competitive world of online advertising, protecting your ad budget is crucial. One of the most insidious threats is competitor click draining. The malicious actors intentionally click on your ads to deplete your budget and reduce your campaign’s effectiveness. 

What is Competitor click draining?

Competitor click draining, also known as click fraud, occurs when competitors or malicious entities click on your ads with the intent to exhaust your advertising budget. Unlike genuine clicks from potential customers, these fraudulent clicks are designed to waste your resources and skew your campaign metrics. This unethical practice not only reduces your ad campaign’s effectiveness but also impacts your return on investment (ROI) by driving up costs without generating genuine leads or sales.

Solution to competitor click draining

Protecting your marketing budget from competitor click draining requires a multi-faceted approach, combining technology, monitoring, and strategic adjustments. Here are some effective strategies:

1. Implement Click Fraud Detection Tools
2. Monitor Your Campaign Metrics Regularly
3. Set Up IP Exclusions
4. Employ Ad Verification Services
5. Adjust Your Ad Settings

Learn more about this issue in detail: Protecting Your Shopify Business from Competitor Click Draining: Detection and Prevention

Issue 7: Click farming fraud to Shopify business

Click farming involves generating fake clicks on online content, often through organized groups or automated bots, to artificially inflate engagement metrics. This deceptive practice not only distorts your marketing analytics but can also lead to significant financial losses and potential legal issues. By comprehending the mechanisms and legal ramifications of click farming, businesses can better protect themselves from falling victim to such fraud and avoid unethical practices that could harm their reputation and operations.

What is click framing?

Click farming is the practice of using a large group of people or automated bots to generate fake engagements on digital content. This can include clicking on ads, liking social media posts, following accounts, or generating comments. The main goal is to create the illusion of popularity and engagement.

Solution to click framing

1. Implement Click Fraud Detection Tools
2. Monitor Your Campaign Metrics Regularly
3. Set Up IP Exclusions
4. Employ Ad Verification Services
5. Adjust Your Ad Settings

Learn more about this issue in detail: What is Click Farming? Understanding Its Legal Implications and Protecting Your Shopify Store

Fraud issues on Shopify category 3: Chargeback abuse

Issue 8: Discount code abusing on Shopify

Discount codes are a powerful tool for driving sales and rewarding customers on your Shopify store. However, without proper protection, these codes can be leaked or misused, leading to significant revenue losses. Ensuring discount code protection is essential to maintain the integrity of your promotions and prevent unauthorized usage.

What is discount code abusing?

Click farming is the practice of using a large group of people or automated bots to generate fake engagements on digital content. This can include clicking on ads, liking social media posts, following accounts, or generating comments. The main goal is to create the illusion of popularity and engagement.

Solution to Discount code abusing on Shopify

1. Implementing Unique and Single-Use Codes to improve discount code protection
2. Limiting Code Distribution and Validity
3. Monitoring and Analytics Code Usage
4. Securing the Discount Code Generation Process
5. Using Advanced Protection Tools

Learn more about this issue in detail: Discount Code Protection on Your Shopify Store: Preventing Leakage and Unauthorized Usage

Issue 9: Inventory Denial Attacks on Shopify

Inventory denial attacks, also known as inventory hoarding or exhaustion attacks, pose significant risks to Shopify store owners. These attacks involve malicious actors manipulating your store’s inventory system to create artificial stockout, resulting in lost sales and a poor customer experience.

How Inventory Denial Attacks Work

 In an inventory denial attack, the attacker adds a large quantity of items to their cart without intending to complete the purchase. By holding these items in the cart, they make them unavailable for other customers to buy. This can create a false impression of stockouts, leading genuine customers to believe the products are out of stock and look elsewhere. The attacker may use automated bots to perform these actions repeatedly, exacerbating the impact.

Solution to Inventory Denial Attacks on Shopify

1. Real-Time Monitoring and Alerts
2. Advanced Bot Detection
3. Rate Limiting and Throttling
4. IP Blocking and Geofencing
5. Comprehensive Analytics

Learn more about this issue in detail: Protecting Your Shopify from Inventory Denial Attacks: Ensuring Product Availability

Fraud issues on Shopify category 4: E-commerce order fraud

Issue 10: Friendly Fraud on Shopify

Friendly fraud is a growing concern that can significantly impact your business’s bottom line. This type of fraud occurs when a customer makes a purchase and then disputes the charge with their bank, claiming it was unauthorized or that they did not receive the goods or services.

What is Friendly Fraud on Shopify?

Friendly fraud, also known as chargeback fraud, occurs when customers dispute legitimate transactions. This type of fraud can be intentional or unintentional. Sometimes, customers may genuinely forget about the purchase, while others might exploit the chargeback system to get products or services for free.

Common Types of Friendly Fraud:

• Digital Goods Fraud: Customers download digital products and then claim they never received them.
• Subscription Fraud: Customers subscribe to a service, enjoy it, and then dispute the charge.
• Physical Goods Fraud: Customers receive high-value items and then file a chargeback, claiming non-delivery or unauthorized purchase.

Solution to Discount code abusing on Shopify

1. Implement Robust Verification Processes
2. Monitoring and Analytics
3. Using Skyflare for Advanced Fraud Detection
4. Educate Your Customers
5. Managing Fraudulent Orders

Learn more about this issue in detail with real cases: Chargeback Protection: Strategies to Identify and Prevent Friendly Fraud on Shopify

Issue 11: International Reshipping Fraud

International reshipping fraud is a sophisticated scam that poses a significant threat to e-commerce businesses, especially those operating on platforms like Shopify. Fraudsters exploit stolen credit card information to purchase goods, then send the goods to intermediaries and eventually forwarded overseas. 

International Reshipping Fraud on Shopify

This type of fraud not only results in financial losses for merchants but also complicates the process of identifying and preventing fraudulent transactions. Shopify stores are particularly vulnerable due to the platform’s global reach and the ease of setting up international shipping.

Solution to Discount code abusing on Shopify

By understanding how reshipping fraud works, implementing robust verification processes, monitoring transactions, using advanced fraud detection tools like Skyflare, and educating your customers, you can protect your business from unauthorized chargebacks.

Learn more about this issue in detail: Identifying and Preventing International Reshipping fraud in Your Shopify Store

Issue 12: Digital product fraud on Shopify

Digital products offer a convenient way for customers to access content. They also present unique challenges for e-commerce businesses, particularly regarding fraud prevention. On Shopify, digital product fraud can lead to significant financial losses and undermine customer trust. 

How Can Digital Products Get Scammed on Shopify?

Digital products, such as eBooks, software, online courses, and gift cards, are particularly vulnerable to fraud due to their immediate delivery and ease of distribution. Fraudsters often use stolen credit card information to purchase these products and quickly download or redeem them, making it difficult for merchants to detect and prevent fraud before it occurs.

Solution to Discount code abusing on Shopify

1. Implement Robust Verification Processes
2. Monitoring and Analytics
3. Using Fraud Detection Tools such as Skyflare
4. Educate Your Customers
5. Managing Fraudulent Orders

Learn more about this issue in detail: Digital Product Fraud Prevention: Secure Digital Product Sales on Shopify Store

Fraud issues on Shopify category 5: Malware attacks

Issue 13: Malware on Shopify

Shopify is a leading e-commerce platform that allows businesses to create online stores easily. However, like any digital platform, Shopify is not immune to cybersecurity threats, including malware. 

What is Malware?

Malware, short for malicious software, is any software intentionally designed to cause damage to a computer, server, or network. It includes viruses, worms, trojan horses, ransomware, spyware, adware, and other malicious programs. In the context of e-commerce platforms like Shopify, malware can compromise store security, steal customer data, and disrupt business operations.

Solution to Malware on Shopify

1. Implement Strong Security Practices
2. Monitoring and Analytics
3. Using Advanced Security Tools
4. Educate Your Team

Learn more about this issue in detail: Understanding Malware on Shopify

Issue 14: Phishing on Shopify

Phishing is a major threat to e-commerce platforms like Shopify. These deceptive attacks can compromise sensitive data, resulting in financial losses and damaged reputations. For Shopify store owners, understanding and implementing effective phishing prevention strategies is crucial.

Understanding Phishing 

Phishing involves fraudulent attempts to obtain sensitive information by disguising as a trustworthy entity. Common types of phishing attacks include:

• Email Phishing: Fraudulent emails that appear to be from reputable sources.
• Spear Phishing: Targeted phishing attacks aimed at specific individuals or companies.
• Smishing and Vishing: Phishing through SMS and voice calls, respectively.

Phishing attacks often target Shopify stores by attempting to steal login credentials, payment information, and personal data.

Tools and Techniques for Phishing Prevention 

Effective tools and techniques for phishing prevention on Shopify include:

• Anti-Phishing Software: Tools like Skyflare provide real-time monitoring and automated detection of phishing attempts.
• Secure Email Gateways: Implementing email filters to block suspicious emails.
• SSL Certificates and HTTPS: Ensuring your Shopify store uses SSL certificates to encrypt data and protect customer information.

Learn more about this issue in detail: Phishing on Shopify: A Protection Guide for Shopify Store Owners

Issue 15: Shopify Gift Cards Fraud

Gift cards are a powerful tool for Shopify store owners, driving sales and increasing customer loyalty. However, with the rise of digital transactions, gift cards have become a prime target for fraud. Securing Shopify gift cards against automated cracking attempts and other fraudulent activities is crucial for maintaining customer trust and safeguarding your business.

Risks with Shopify Gift Cards

1. Automated Cracking Attempts: Automated cracking attempts involve using software to guess valid gift card codes. Fraudsters deploy scripts to try thousands of combinations quickly, hoping to hit a valid code they can use or sell.
2. Phishing Attacks: Fraudsters send fake emails that appear to be from the store, tricking customers into revealing their login credentials. Once obtained, these credentials are used to purchase gift cards fraudulently.
3. Insider Fraud: Sometimes, employees with access to gift card systems may misuse their privileges to generate and use gift cards for personal gain.

Best Practices for Gift Card Security

• Use Strong Passwords
• Regularly Update Security Settings
• Monitor Gift Card Transactions
• Educate Employees and Customers

Learn more about this issue in detail: Securing Shopify Gift Cards: Preventing Automated Cracking Attempts