During our recent CommerceNow event, fraud expert Tara Kendrick of Experian presented a wealth of valuable information regarding the increase in eCommerce fraud, where eCommerce fraud is taking place and recommendations for fighting eCommerce fraud. Begin developing an effective and affordable fraud prevention strategy for your business by watching her session or reading the handy summary below.
All businesses are vulnerable to fraudulent activity. This means every eCommerce business has a need to balance several factors in order to reduce fraud without negatively affecting the customer experience or spending too much money on fraud prevention.
Key factors to consider are:
Keeping each of these elements in mind when developing your business’s fraud prevention program will get you the results you need without costing too much money or inconveniencing your customers by making them jump through lots of verification hoops.
When developing an eCommerce fraud prevention program, there are a few key performance indicators you should examine in order to detect as much fraud as possible with the least impact on good customers.
KPIs to focus on include:
As you begin to track these indicators, you will be able to see just how much fraud is affecting your business, and what action you can take to combat it.
There are many reasons eCommerce fraud is on the rise, including EMV adoption, data breaches and automation of fraud attacks. It’s important to understand each one to evaluate the potential impact on your business.
The switch to EMV, or chip-and-pin cards, has significantly decreased cardpresent fraud and counterfeit fraud. Because of the extra layer of authentication EMV requires to complete a card present purchase, fraudsters have had to turn to other avenues via which to conduct their activities, which have primarily been online eCommerce businesses. The increase in card not present fraud as a result creates a particular challenge for eCommerce merchants.
Data breaches in the US alone rose about 45% in 2017 versus 2016, in part because it has become easier for fraudsters to gain access to legitimate cardholder details. To protect themselves from becoming the victim of a data breach, businesses should always engage in data security best practices. Furthermore, savvy businesses should also keep up with news and trends regarding data breaches at financial institutions and other businesses in order to better detect whether compromised data is being utilized to conduct fraudulent activity with their own organization.
Automation of fraud attacks presents a growing challenge to eCommerce businesses. Committing fraud used to require a sophisticated set of skills, but now it is much easier to pull off automated attacks that initiate thousands of transactions, creating a high volume of fraudulent orders at high speeds requiring a quick response.
As you can see, it is vital for companies to ensure they are using multi-layered strategies to combat fraud. Some important elements of a multi-layered strategy include:
Businesses should also take a holistic view of the customer life-cycle to understand what differentiates a legitimate customer relationship from a fraudulent order, and develop ways to strengthen customer relationships to reduce fraud risk. Focus on recognizing customers, creating a convenient customer experience and building trust with customers over time.
As you develop your anti-fraud program, it’s important to remember that new sales channels and payment methods, while exciting, can be risky: mobile and IoT are two growth areas that may also be ripe for fraud. Keep this in mind when launching new channels, and ensure that you take appropriate fraud prevention measures.
The best ways for your buyers to prevent fraud are fairly straightforward. Help them help you, by advocating best practices to them such as:
Passing on these tips to your buyers will help you win their trust.
For further information, take a look at the full presentation from the CommerceNow webinar for other fraud-fighting tips to help your business.