Personal Finance

online shoplifting

What is online shoplifting?

Online shoplifting is the theft of goods from Internet-based merchants. Online shoplifting seems harmless because the shoplifter never interacts with the victim and executes the fraud with a few keystrokes and mouse clicks. Still, it’s a crime, and online store thieves can face serious legal problems, such as mail fraud charges.

key takeaways

  • Online shoplifting involves stealing products from e-commerce sites.
  • Chargebacks or disputes claiming that the goods were never received (though they did) are a form of online shoplifting.
  • This type of fraud has secondary effects, including credit card issuers refusing to work with merchants due to excessive chargebacks.
  • Illegally downloading copyrighted music, books or movies is another form of online shoplifting.

How Online Shoplifting Works

One way to commit online shoplifting is through the chargeback process for credit cards. Consumers use a credit card to buy an item online, receive the item, and then submit a statement to the credit card company claiming they never received the item. As a result, credit card companies initiate chargebacks and force merchants to refund customers for their purchases.

Even if customers never set foot in a merchant’s location, they are effectively shoplifting by using the chargeback process to fraudulently obtain items without paying. What’s more, if a credit card payment processor gets too many chargeback requests against the same company, it could stop doing business with them. Online merchants then suffer secondary damage from online shoplifting because they can no longer accept a certain brand of credit card. This, in turn, could reduce sales, as the inability to accept the card would be a huge inconvenience to customers.

To be clear, chargebacks are not inherently fraudulent, but when consumers misuse this tool designed to protect consumers, it raises alarm for retailers and credit card issuers. Except for lost items, New York Times The average cost of processing a refund request is as high as $40, the report said.

Types of Online Shoplifting

Another way to do online shoplifting is through piracy. Illegal free download of copyrighted music, books or movies instead of buying them through legal channels is a form of online shoplifting that robs producers and distributors at the same time.

This issue has posed a challenge for a number of reasons. Consumers of pirated content want free, or at least very low cost. Second, media companies often lack the resources to deal with the growing demand for free content. The digital media “underworld” is growing faster than big business, with clever hackers and pirates banding together across the globe. Third, the proliferation of user-generated content has allowed anyone and everyone to create and distribute content without even realizing they are violating copyright in the process.

When looking for solutions, there is no hard evidence or a universal set of best practices to deter pirates. Companies will need to piece together their asset protection strategies to minimize losses and ensure feedback loops are in place.

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