Whether you sell goods online, via mobile or by phone, you’ll likely have noticed an uptick in fraud attempts recently. In fact, the Global Fraud Attack Index™ found that in 2015, online fraud attacks rose by 215 percent — an astonishing amount. Fraudsters are also getting cleverer about how they attack, using technology to speed things up. The same study found that more than 80 percent of U.S. fraud attempts used botnets. In response, retailers are turning to a new generation of faster, smarter fraud prevention solutions.
The rise in fraud was anticipated by industry experts, who noted that EMV (microchip cards) adoption in other countries had helped stop card-present fraud, but also led to significant CNP fraud increases. Fraudsters don’t give up just because one kind of fraud has become harder — they just shift to another channel.
At the same time, customer expectations are higher than ever. So the challenge for online retailers is to combine effective fraud prevention that protects their bottom line with great customer experience and high approvals, to increase sales. In this slideshow, Bill Zielke, CMO of Forter, explains some of the key things that e-commerce merchants should be thinking about to achieve the best of both worlds.
Battling E-Commerce Fraud
Click through for key elements that e-commerce merchants need to consider to provide effective fraud prevention as well as a great customer experience, as identified by Bill Zielke, CMO of Forter.
The Customer Comes First
As Gartner noted in the April 2016 report How Card Acceptors Can Protect Against the New Wave of Card Fraud, “Web commerce has shifted the role of fraud detection from the arcane back office loss prevention department to being front and center in the customer experience.” Fraud prevention happens right at the crucial moment of check out – so you want to make sure that it is protecting your business without intruding into the customer experience. That’s something many businesses forget about when they’re concentrating on stopping fraud — so remember that preventing loss shouldn’t get in your customers’ way. Try to avoid calling and demanding extra information from customers and make sure that fraud prevention needs aren’t adding delay to the checkout, order confirmation or fulfillment processes. Fraud prevention should be invisible to customers.
Fraud Prevention Impacts Sales
Fraud is such a concern for many businesses that it can come to be viewed out of proportion. It’s true that each dollar lost to fraud costs the business more than double that, and that this can have a significant impact on a company’s bottom line, but losing out on good sales to genuine customers because of fraud prevention that annoys or rejects them by mistake can cost a business even more. The Annual Fraud Benchmark Report found that 70 percent of businesses think that up to 10 percent of the orders they reject are really good ones. That’s a lot of money to say no to. Make sure your system isn’t set up to be risk averse – you want accuracy, instead. Frequently re-evaluate (or make sure your solution provider is re-evaluating) how it’s set up to make sure it’s reflecting current customer trends and you’re not turning business away.
Eighty-three percent of online retailers still rely on manual reviews as part of their fraud-fighting process. Until recently, there was no choice, but modern technology means that there are now more sophisticated methods of stopping fraud for online businesses. The delays in confirming and shipping orders caused by manual reviews (with each review taking five minutes, it’s easy to see how it builds up fast) are bad for customer experience and for sales. Moreover, manual reviews cause companies to struggle on weekends and during busy holiday periods, when they ought to be giving the best possible experience to their customers. Businesses can and should start taking advantage of the automation that is now possible, streamlining the purchase process. Some fraud prevention companies even offer an entirely automated solution, eliminating the need for manual reviews.
Revving Up for Real-time
Limiting or banishing manual reviews will also help online retailers shift toward meeting customer expectations, in today’s real-time reality. This is particularly relevant for digital goods merchants, of course, but it’s important for physical goods retailers not to underestimate the importance to today’s consumer of real-time service. With a cell phone in every pocket, and each phone possessing more computing power than the machines that sent men to the moon, it’s no surprise that customers are impatient of delays that may cause them to give up or cancel orders.
Make Sure You Are Mobile Optimized
Mobile commerce, which got off to a slow start, seems to be coming into its own this year, with many customers researching and purchasing products online — sometimes even from within a store, if they can get a discount that way. Retailers have learned the necessity of a mobile-friendly site, and many even promote their own apps, but few realize that it’s equally important to make sure fraud prevention is also adapted for mobile use. Only 52 percent of merchants track mobile fraud separately, even though both fraudster techniques and customer behavior are different on the mobile channel. This will likely lead to fraudulent orders slipping through, and good orders being blocked — outcomes no retailer wants.
Invest in Research
Things change all the time in the fraudster underground, and it’s worth staying abreast of what’s current there. New techniques, new approaches, new groups of fraudsters joining together for theft — all of these can impact your business and the ways the criminals attack it. Similarly, customer buying trends and behavior patterns change all the time as well, and you’ll want your antifraud efforts to be able to handle those changes. Make sure that you or your solution provider are paying attention to and researching these developments that can affect your business.