Confidently Ship Risky Overnight Orders
It’s one of the oldest CNP (card-not-present) fraud tricks in the book: request priority handling and/or overnight shipping. The reason is simple. It works. And it’s one of the (many) reasons CNP transactions account for 52% of total fraud but just 40% of overall sales. By forcing online retailers to fulfill orders before adequate time to fully vet them, fraudsters attempt to capitalize on merchants’ desire to deliver great customer service.
But for Electronics eCommerce businesses, the stakes are higher than for other types of online retail businesses.
- Competition is fierce in the Electronics industry. Most large eCommerce sites offer priority handling and/or overnight shipping. If you’re a smaller online retailer, you may feel compelled to match their service levels, even if you lack their sophisticated fraud prevention capabilities.
- Margins on Electronics products are thin. On most of the products you sell – and especially items like tablets and gaming systems that are popular for both legitimate customers and fraudsters – it can take up to 150-200 “make up” sales to recover the loss from just a single fraudulent order.
- Electronics are a big target. Electronics and computers are a top 3 target for online fraudsters and criminal gangs. And with increasing sophistication and automated tools, it’s easier than ever for fraudsters to make multiple, repeated attempts to circumvent your fraud processes. In other words, they don’t care how many attempts it takes, as long as they are ultimately successful.
For many online retailers, the default response is to manually review orders with priority handling and/or overnight shipping. Here’s the problem with that strategy:
- Higher operating costs. Human agents and manual reviews are the most expensive part of any fraud operation. That means those orders become your most expensive to fulfill, reducing margins even further. And since about 75% of manually-reviewed orders end up being approved, you’ll be spending good money on most of those priority handling and/or overnight shipping for no good reason.
- Lost sales. Every retailer has their “go/no go” cutoff time. If you have too many orders to manually review in that last hour before your deadline, the ship date for an order can push another 24 hours, which leads to customer dissatisfaction. Of course, fraudsters are happy to contribute to your deadline pressures. For example, one Kount customer was hit with over 10,000 fraudulent orders in a 24-hour period on the day after Christmas.
The good news? Enterprise-class fraud prevention systems can help online retailers avoid these issues and achieve lower operating costs, higher order approval rates, higher topline revenue and greater profitability:
- Welcome known customers and flag returning “bad guys”. Advanced fraud control platforms like Kount detect and evaluate hundreds of data points around a single transaction. When it “recognizes” the email address, IP address, device ID and other parameters of an order as those of a returning, legitimate customer, it can automatically wave the transaction through without delay or review. Conversely, if a fraudster on your negative list returns, it will automatically discard the order without wasting your time or effort on evaluating it.
- Foil first-time fraud. Fraudsters will often use priority handling and/or overnight shipping the first time they attempt to defraud you. Kount provides protection against this ruse in a number of ways. First, while a fraudster may be visiting your site for the first time, Kount processes hundreds of millions of transactions each year. We probably have spotted them on other sites and can take advantage of our “network effect” to protect you. And even in the event of true first-time fraud, Persona technology from Kount builds profiles of “virtual” fraudsters based on the data, behaviors and markers of actual fraudsters. This helps you spot and defeat first time-time fraud.
- Embedded web links. Automated technologies like those described above drastically reduce the number of reviews that eCommerce businesses conduct on orders with priority handling and/or overnight shipping. Then, for that much smaller pool of orders you are reviewing, advanced systems like Kount can speed up reviews with embedded web links to real-time data from third party sources like Lexis Nexis, Whitepages Pro, Emailage, and more. Your agents can quickly determine, for example, if a shipping address is legitimate or if an email address is associated with prior fraud. In just 30-45 seconds, they can make a decision and move on to the next order.
In fact, there are a number of other advanced fraud fighting capabilities that help retailers quickly and confidently screen orders with priority handling and/or overnight shipping:
- Superior fraud screening and analytics. Every transaction is analyzed against hundreds of data points – Device ID, Geolocation, Transaction Velocity, Order Linking, etc. – and not just one or two (for example, AVS).
- AI machine learning. Capitalizes on the massive processing and storage capabilities of computers to spot patterns that are undetectable to humans.
- Chargeback feedback. Timely electronic alerts – often within hours of an issuing bank being notified of a chargeback – allow you to intercept “bad” transactions even after they’ve been approved, so you can avoid product losses and chargeback fees.
If you’re losing sales or losing money as you try (unsuccessfully) to balance fraud prevention against higher sales while processing orders with priority handling and/or overnight shipping, discover more of the ways you can win the battle. Download the eBook: 7 Fraud Myths That Cost Online Electronics Retailers.