The recent Equifax data breach has online payment fraud and credit fraud prevention top of mind for many, and rightfully so: besides the massive identity theft affecting 143 million consumers, more than 200,000 credit card numbers were stolen.
Unfortunately, the cost of fraud as a percentage of revenue continues to grow each year. Our recent webinar, “How Optimizing Your Fraud Prevention Strategies Can Increase Your Bottom Line,” tackled some of the most common eCommerce security threats you might face and how to combat them with fraud prevention. Here’s a taste of what we covered to get you started with your fight against fraud.
The Scope of eCommerce Fraud
According to a study done by Juniper Research, Card Not Present (CNP) fraud accounts for 60-70% of all card fraud in many developed countries and the problem continues to grow. It is estimated that by 2020, US$31 billion will be lost to chargebacks.
Fraudsters really like to go after items that have high resale value or are easy to pirate. They also tend to target new sellers, so eCommerce providers should be particularly vigilant for fraud early on in their tenure. New sellers may be eager to accept sales and are less knowledgeable about payments fraud detection. You can protect your business by educating yourself and working with a fraud prevention partner.
Why Are eCommerce Merchants Particularly Vulnerable to Fraud?
There are many ways in which fraud can occur and just as many reasons why eCommerce providers are vulnerable to fraud. Due to the nature of eCommerce transactions, it is more difficult for eCommerce providers to prevent fraud as chip-and-PIN cannot be utilized and asking buyers to provide photo ID may deter them from proceeding with their purchase.
Fraudsters prefer to go after items that have high resale value or are easy to pirate. They also tend to target new sellers, so newer eCommerce merchants must be particularly vigilant. New sellers may be eager to accept sales and less knowledgeable about fraud detection. However, all merchants can protect their businesses by educating themselves on fraud and working with a fraud prevention partner.
Some eCommerce Fraud Prevention Best Practices
2Checkout takes comprehensive steps to mitigate fraud, including a fraud review process that begins with automated detection in combination with manual reviews conducted by highly trained fraud analysts and ends with approval or cancellation of every order.
Additionally, 2Checkout constantly evaluates emerging fraud trends and makes adjustments to the 300 different fraud detection rules in an effort to stay one step ahead of the fraud. This fraud prevention process is further enhanced by the communication and interaction with our merchants and their buyers.
Some best practices that eCommerce merchants can embrace to help prevent fraud include:
- Knowing where your customer base tends to be located
- Knowing what types of sales are typical for your customer base (dollar amount, frequency, etc.)
- Requiring CVV and Billing Address input for all orders
- Utilizing 3-D Secure authentication
Why Fraud Prevention Requires Teamwork
Essentially, stopping fraud is all about protecting your bottom line. When fraudulent orders are processed and fulfilled by your business, the negative impact is two-fold: loss of revenue due to refunds/chargebacks and loss of product due to the fulfillment of said orders.
While 2Checkout is always on the lookout for fraud, we need your help because no one knows your customers as well as you do. By understanding who your customers are (and aren’t), adding secondary protection to your checkout process and collaborating with us, you’ll be able to prevent as much fraud as possible while fulfilling orders for your legitimate customers.
Ready to learn more? Check out the 2Checkout webinar on How Optimizing Your Fraud Prevention Strategies Can Increase Your Bottom Line.