September 5, 2018
As online commerce continues to swell at record speed, so does the corresponding eCommerce fraud, with losses expected to reach $7.2 billion by 2020. These bad actors are seriously hurting merchants (not to mention banks and payment providers) as they suffer the effects of fraudulent orders and lost revenue from declining legitimate orders. Adding insult to injury, merchants are often hit with the 1-2 punch of chargebacks—when you lose revenue and merchandise, and then are dinged with fees and fines by payment processors.
Today’s merchants are well aware of fraud, often employing expensive manual and technological measures to mitigate it. But while they are certainly on the lookout, oftentimes that lookout is looking South while the ship is headed North. As such, there are some “hidden” signs of fraud, or warning signs, that should be top of mind for merchants as they look to step up their anti-fraud game:
- Appearances Are Deceiving: We’ve all seen the Citibank commercial where the actors speak in a voice that is not their own, which aired back in 2006. The commercial’s thesis? Buyers and transactions can appear to be legitimate when actually nefarious. Never assume that just because someone looks and sounds like legitimate, that means they are a good actor. This is where sophisticated machine learning technology plays a role—it is able to run hundreds of models and identify fraudulent patterns in seconds where we mere mortals cannot.
- Trust Can be…Untrustworthy: Often times fraud is conducted by a buyer that exhibits all of the signs of being the most trustworthy. Fraudsters build an early case by racking up legitimate purchases or proactively communicating with customer service to give the impression of a trusted transaction. Because of these appearances, fraudsters are more effective to take advantage of merchants down the line, and get away with deceptive practices.
- Oversight Must be Overseen: Many merchants put anti-fraud practices in place and then take their eye off of the proverbial ball and assume all will be well. Fraud practices are always evolving, and this eyes-off, hands-off approach by merchants can result in glaring holes that lead to fraudulent practices and lost revenue. One piece of anti-fraud strategy is not sufficient – there must be multiple strategies in place to provide complete protection.
In order to focus on boosting sales without boosting fraud, vendors must keep their eyes wide open and be aware of both obvious and hidden fraud tactics. Anti-fraud strategies should be tailored to each individual situation and payment method, and employ a combination of human and machine-driven anti-fraud strategies. The learning? Don’t get snowed by watching the wrong skiers.
Want to learn more? Check out a recording of Kount’s recent webinar on “The State of eCommerce Fraud Prevention”.