Retailers that have pivoted successfully to digital commerce soon end up being targeted by fraudsters. Here are some tips to keep them at bay.
Even as the world turns to online shopping to circumvent supply and geographical constraints amid the pandemic, e-commerce platforms and vendors are facing challenges with fraud prevention.
E-commerce fraud can comprise identity theft, credit card fraud and account-takeover, to name a few. For an e-tailer with an inventory of say, 13,000 products and processing over two million customer orders a month, the growth of business can put it in the sights of fraudsters.
Note that expansion for any company need not necessarily be a pipe dream, especially when credit card transactions are expected to reach big numbers in the coming years. The Nilson Report has estimated that in the APAC region, credit cards will account for 288 billion purchase transactions, double the amount churned out by the US market.
According to Chargebacks911, a solutions and chargeback management company, APAC is looking to be the most exciting regional market in the next decade. With those kinds of numbers, fraud would not be far behind. The sad truth is that retailers usually end up paying for losses after the fraud has been found out.
The firm offers the following practices to intercept fraud:
- Requesting the card security code (CVV) at checkout
- Offering account creation, but making it optional
- Requiring complex, unique passwords for accounts
- Deploying 3-D Secure 2.0 technology
- Employing passive, back-end fraud tools like geolocation and IP verification
- Allowing for auto-populating fields, but requesting that customers verify the information
- Offering two-factor authentication and biometrics, when available
- Making customer service information clearly visible, and providing round-the-clock assistance
- Offering a bonus for accepting store credit in place of cash during the return process
- Allowing customers to either save their cart and come back later, or assemble a wishlist
The case for real-time fraud management
While all of the above can be effective, time is of the essence, to ensure better customer experience and to reduce false declines.
For Australian online beauty store Adore Beauty and online fashion company Hello Molly, time and resources are better spent on speedy delivery of products and customer satisfaction rather than fraud management.
Adore Beauty used to rely on their payment gateway vendor’s fraud management tools but these entailed a slow process of manually reviewing transactions. An automated, real-time tool was needed.
Said its founder Kate Morris: “Over the last four years we’ve grown by more than 400%. The key to this success has been scaling the business safely while still delivering a great customer experience,” adding that her firm’s switch to Forter‘s identity-based fraud prevention solution provided automated, real-time decisioning so “we don’t have to worry about fraud anymore.”
Chargebacks had declined to fewer than 20 basis points after adoption of real-time fraud prevention.
Similarly, Hello Molly experienced a 0.06% chargeback rate after switching to Forter’s real-time fraud management solution. The solution made accurate approve/decline decisions in under one second on every transaction, paving the way for positive results.
Its Operations Manager Ena Eaton said: “Forter’s innovative fraud prevention technology has proven to be a true business solution for us. No more scores, no more lengthy review queues. They have taken the guesswork out of fraud prevention.”