Good eCommerce fraud management is vital in 2021 because quite frankly, online fraud is booming. eCommerce sales surged last year but, unfortunately this came with a rise in card-not-present fraud. In the United States for example depending on what source you believe the industry grew by up to 40%. The US census Bureau reported that Q3 2020 eCommerce increased 36.7 percent from Q3 of 2019 while total retail sales increased 7% in the same time. In Q3 of 2020 eCommerce sales account for 14.3 percent of total sales. This shift to eCommerce has opened the door for criminality as businesses have just started experimenting with previously unused processes. Retailers are processing more orders as new sales channels like curbside pick-up have been introduced to the customers. Scammers also have more opportunities to target customers who are quite new to the whole online buying process.
Common frauds 2021
Understanding the major fraud challenges a business is likely to fight is key to devising a wider eCommerce fraud management strategy. Among the most common types of eCommerce frauds recently is Card-not-present fraud. The scheme involves using stolen credit cards and customer information to pass orders online. The credit card owner inevitably disputes the transaction forcing the business to issue a refund. In some cases credit card companies pick up the cost when the transaction is disputed. Fortunately credit card companies often have insurance against this type of fraud. If anyone losses out it is either the customer or the online business, in many cases small businesses. This scheme has haunted eCommerce since inception and has improved at least as fast as cybersecurity over the decades.
Return fraud is another major problem to online retailers and it is a truly global phenomenon. In this case, the fraudster is attempting to get a product for free by creating multiple accounts to buy multiple goods. Thereafter they return the original packaging empty and sell goods. This scheme costs businesses a lot of money as the cost of tracking down this fraud individual often exceeds the value of the business lost. It really turns out to be a lose lose for the business. It requires a systematic rather individual solution.
The current circumstances make eCommerce fraud management systems more important for online business. The problem is not limited to scammers as when a fraud management system flags legitimate buyers, it poses a big problem. The risk is more than 60% these customers may never patronize business as a result. Fraud management is a truly delicate balance as the security systems must not interfere with the customers buying process.
Fraud management in 2021 is assessing risks and developing systems as well as adopting practices that minimize fraud without reducing sales. This big picture approach helps learn fraud trends specific to certain businesses to develop systems that mitigate these fraud risks. Retailers often take fraud management measures to extremes after they have been victims of fraud. The result filters out all customers who might vaguely fit the description of potential fraud. This is the leading cause of false declines and is a major deficit for sales and customer experience. Smart fraud management gives online customers aim to mitigate fraud losses whilst increasing customer retention and the buying experience.
Many businesses have only recently begun their online journeys but there are some quick systematic solutions all businesses can benefit from. Firstly, and obviously for businesses to have a strong password policy. Customers with weak passwords put their data and business at risk. Account takeover fraud cost more than $5 billion a year. This is the importance of a strong password policy throughout a business’s digital infrastructure. Customers must be compelled to use long passwords with a combination of lower and uppercase letters, numbers, and symbols. It ensures the safety of customer date or accounts from online fraudsters.
Secondly it is important to work with expert during systems integrations or upgrades of digital systems. This is where the usefulness of digital agencies like DigiCommerce. Most businesses leave considerable loopholes for fraudsters to take advantage of. Security minded digital agencies mitigate this risk, work with security experts to manage every transaction stage and detect fraud. They also test your system to catch vulnerabilities that expose businesses to fraud. Most eCommerce platforms have alert systems that to notify merchants of suspicious activities like. For example.
In conclusion, a fraud management system is the best defender against unscrupulous elements online. Fraud detection technology is now as aggressive and sophisticated as fraudsters themselves. Preventing fraud and recovering losses are the most cost-effective strategies to increase a company’s profitability in the short to mid term. Advancements in innovation drives fraud detection costs down whilst increasing efficiency gains. This allows for businesses to generate a strong return on investment in fraud detection. The latest fraud detection solutions enables fraud investigators to drive operational efficiency and lower labor costs.