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Fraud Prevention That Shatters Sales

posted on: Wed Jun 28 2017

Want proof that too much of a good thing can be bad? Watch this.


If you’re a powersports, automotive, aftermarket auto parts, or audio aftermarket business conducting online eCommerce, worries about fraud may be costing you revenue.

In the middle of a fraud-rich landscape, most online retailers default to increasing manual reviews or tightening standards.

But there’s a risk of clamping down too hard.

This can lead to too many false positives and reduced sales. In fact, Javelin reports that fear of fraud causes merchants to mistakenly turn down $118 billion a year in valid orders. What’s more, the threat of fraud can cause online retailers to simply avoid new markets, new channels, or new products.

The risk of fraud is real, and this industry has some unique challenges, such as:

  • High-value merchandise. With audio systems, performance wheels and other merchandise valued in the thousands of dollars, you’re a lucrative target for fraudsters. Why? The higher the value of transaction, the more likely it is to be fraudulent. Industry data shows that a $2,400 order is 10x more likely to be fraudulent than a $1,500 order.
  • Secondary marketplaces for automotive parts & accessories. Auction sites and marketplaces like eBay Motors, Uneedapart.com, Car-part.com, and Craigslist provide outlets for fraudsters to quickly turn stolen items into fast, easy cash.
  • Hidden costs of fraud. LexisNexis has developed a “true cost of fraud” that assesses all the hidden costs of fraud. For online retailers, this true cost of fraud is 60% higher than for merchants in general.
    • Online merchants = $2.40 in true costs for every $1 in fraud
    • All merchants = $1.47 in true costs for every $1 in fraud
  • Higher card-not-present fraud. EMV adoption at US retail point-of-sale is driving card counterfeiters out of the stores and into the online world. CNP fraud losses are projected to soar 80% over the next few years, hitting a record $7.2 billion by 2020.

In other words, the risk is real, the risk is big, and the risk is growing. 

With so many challenges and fraud schemes, tuning up your fraud prevention is highly recommended. Today’s enterprise-class anti-fraud tools not only reduce fraud losses, but can actually help increase sales by reducing false positives. What’s more, they automate processing to drive down overall fraud mitigation costs.

What should you look for when kicking the tires on fraud prevention solutions?

  1. Superior Fraud Screening and Analytics. The highest performing solutions analyze hundreds of data points per transaction, using multiple integrated technologies to detect fraud.
  2. Real-Time Data. The most powerful anti-fraud systems make it easy to check borderline transactions against third party data services and capitalize on this Big Data in real-time.
  3. Advanced Artificial Intelligence (AI) and Machine Learning. The highest tech vehicles on the road rely on state-of-the-art computing to maximize their performance. The same holds true for fraud prevention. AI and Machine Learning automate insights from Big Data to reduce manual reviews, cut operating costs, and approve more borderline—but valid—orders.
  4. Expert Human Intelligence. Make sure providers have had their “hands dirty” in the fraud fighting world for a while. It takes experience and expertise to deliver a system that makes it easy to respond to adaptable human adversaries in ways that are best for your business.
  5. Strong Partnerships. The best companies consistently bring you new capabilities like chargeback alerts, representment services that fight friendly fraud, biometric feedback, and other innovations so you can not only keep up with fraud, but get ahead of the curve.
  6. Simple, Affordable SaaS. You don’t manufacture the products you sell on your site, do you? The same thinking applies to fraud prevention. Bypass the DIY approach and avoid IT integration hassles, minimize cost and complexity, and gain certainty over costs.

Want to discover if a fraud prevention tune-up can actually drive higher sales for your eCommerce operations? Check out our newest eBook "Does Your Fraud Prevention Need a Tune Up?"

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