Diamonds are a Fraudster’s Best Friend
The qualities that make diamonds "a girl's best friend" are the same qualities that make them (and other jewelry and luxury items) attractive to fraudsters.
- Diamonds are high-value, highly-desired goods.
- Diamonds don’t lose their value over time (in fact, they may even increase in value).
And even more important to fraudsters:
- Diamonds store tremendous value in a small footprint, making them easy to warehouse (e.g., a $5,000 diamond ring takes up 2 inches of space, much less than a $5,000 4K Ultra HD 75-inch TV).
- They can be easily turned into cash without significant discounting from the retail price.
The 4-5% share that online sales have in the global jewelry market adds up to an estimated $10 billion in 2016 sales. What’s more, strong growth in the online segment is expected to double their share to 10% by 2020, which could push annual online jewelry revenues to nearly $30 billion.
And as you’ve heard us say numerous times before, where there’s a lot of online revenue, there’s a lot of online fraud.
- 5% fraud rate for online jewelers is more than quadruple the average for eCommerce transactions in general.
- 13% increase in eCommerce fraud in jewelry industry over the past year.
- Overall, card-not-present (CNP) continues to grow rapidly—analysts forecast losses will soar to $7.2 billion by 2020—as the EMV mandate drives fraudsters out of physical card counterfeiting and into the online world.
But if diamonds are a fraudster’s best friend, Kount Complete—a leading enterprise-class fraud prevention solution used by some of the world’s largest and best-known online sites—is an eCommerce jeweler’s best friend. Why?
Simple, Affordable Software-as-a-Service (SaaS). Many online jewelers got their start in the brick-and-mortar world before transitioning to online sales. Developing sophisticated in-house eCommerce fraud prevention systems is incredibly expensive and time-consuming. At the other end of the continuum, ad hoc standalone antifraud tools that are easy to deploy simply can’t provide the level of protection required when a single fraudulent order can result in a $10,000 (or greater) loss.
With Kount’s Software-as-a Service (SaaS) model, online jewelers can deploy the industry’s most advanced fraud prevention capabilities in as little as 10 days—with no capital investment, no added IT infrastructure, and no big IT integration project. In addition, the SaaS model easily scales to smoothly handle surges in transaction volumes during Valentine’s Day, Black Friday, Cyber Monday, and other peak selling periods, all while providing complete certainty about expenses and profitability.
Further, SaaS solutions like Kount Complete let online jewelers focus on what they do best: selling great jewelry products to customers. With fraudsters and criminal rings continually evolving and adapting their tactics and techniques, it’s impossible for a lone merchant to make the necessary investments to keep pace. It requires sustained investment in systems, research, people, and technology, years of experience, and round-the-clock diligence to stay ahead of them.
At the same time, avoiding false positives (i.e., when borderline but ultimately legitimate orders get incorrectly turned down due to suspicion of fraud) is especially important for online jewelers. After all, an online jeweler with $50 million in annual revenues whose decline rate is just 2% too high (and industry data says it’s likely to be higher than that) will turn down $1 million in revenue every year…year after year. Perhaps even more concerning, wrongly declining one legitimate order from a good customer can lead to the loss of the lifetime value of that customer, which can easily reach six figures in the jewelry industry.
Thus, it’s vital that an online jeweler’s fraud prevention solution do more than just stop fraud. It must enable them to boost sales, too. And that requires a unique combination of capabilities, like you’ll find in Kount Complete.
How do these translate into real-world results? Read the J.R. Dunn Jewelers case study and see how this jeweler increased online order size by 100% at the same time that they cut fraud costs by $10,000 a month.