What Is E-Commerce Fraud Costing Your Business?
Every year we see more and more people moving online to buy or sell important items. In 2016, Australians made 8.1 billion card transactions, totalling $714.5 billion. By 2020, forecasts indicate that online shopping will have doubled since 2015 and account for 15% of all retail sales. This trend is only set to increase, meaning all parties involved in the process should be looking for better ways to combat e-commerce fraud.
Technology is key to ensuring a safe environment in which online customers can freely shop. By analysing the data captured in each sale and customer interaction, these technologies can help merchants identify instances of fraud and fight back against it, protecting customers and the bottom line.
How big of a problem is e-commerce fraud?
Criminals are always looking for new ways to cheat the system for financial gain. With more people embracing online shopping methods, along with the evolution of mobile sales, we’ve seen a sharp spike in the incidence of online fraud. Online credit card fraud has soared, costing Australian cardholders $417.6 million in 2016. And while businesses work hard to keep ahead of the fraudsters, they’re often on the losing end. In fact, they seem to be outnumbered, as new tactics are developed to exploit weaknesses in existing systems, including the security mechanisms aimed at preventing such activity.
As more people shop online merchants not only have to contend with traditional fraudsters, they also face increased rates of friendly fraud. This occurs when a customer makes a purchase online with their credit card, receives the good or service, and then contacts their card-issuing bank to dispute the charge, claiming they did not make the purchase.
Often, there are indicators that can help identify when fraud is happening or about to happen. However, as more payment methods are released to facilitate faster online transactions, security protocols and capture technologies can be readily overlooked. To this end, e-commerce fraud has grown dramatically in areas like new online payment methods, account takeover, and payment fraud.
For example, with more customers making purchases through their mobile phones, merchants and banks alike have quickly noticed the lack of security measures in place to protect such transactions. Historically, emphasis has been placed on security measures for PCs and laptops as a point of threat, but not mobile phones – which now act as sophisticated mini-computers. Because of this, fraudsters have set their sights on this mode of purchase, resulting in a dramatic increase in mobile fraud attempts.
How do we fight these vulnerabilities?
With merchants, issuers, and customers all increasingly conscious of the potential for attack or friendly fraud, the uptake in prevention technologies and secure transaction portals is increasing. Rather than relying on in-house fraud detection and prevention solutions, more are outsourcing to providers like Verifi, which can manage the entire transaction life-cycle and protect payments.
With this in mind, merchants should take steps to assess their current solution, and evaluate if it is providing them with adequate protection against e-commerce fraud.
Businesses must look for end-to-end payment protection and management solutions that tackle e-commerce fraud head on. The best solutions deliver intelligent analysis of the data collected throughout the transaction life-cycle, and/or during a chargeback claim to protect businesses from fraudulent actors – and fight back on falsified chargeback claims.
Putting data and intelligent analysis at the core of your fraud prevention solution will provide greater insight into transactions and chargeback claims, and help you to better identify instances of suspected fraud. With the huge annual cost of friendly fraud and chargebacks to businesses, it is undoubtedly in the interest of merchants and card issuers to ensure they are taking every step to reduce e-commerce fraud.
Contact us today to learn more on how you can implement a multi-layered fraud protection solution that fights in your corner against traditional and friendly fraud.