In the days of brick and mortar, retailers had plenty of opportunities to build their brand by providing consumers the ultimate shopping experience, from impressive showrooms to in-person customer service. Today, with 87% of American adults making at least one online purchase a month, the rules of the game have changed. Brand reputation is no longer based on the in-store experience, but rather on a smooth and easy one online.
Merchants have good reason pouring resources to uphold a seamless online shopping journey. Consumers tolerance for friction is low, and unnecessary hurdles reflect poorly on a brand. At checkout, the need to protect both merchant and customer from fraud too often creates friction. Intrusive personal questions, multi-factor authentication and long processing times are all deterrents for shoppers, so merchants must to strike the right balance between fraud and friction by investing in accuracy and transparency.
In this post, we’ll share some insights on how fraud prevention systems rely on technology to assess risk, and what this means for merchants and consumers. We’ll also offer four best practices to minimize fraud while boosting brand reputation.
Tip #1 - Protect your customers’ accounts - and their loyalty
With every advance in fraud prevention, new threats emerge as fraudsters seek out new vulnerabilities to exploit. With an accumulated yearly cost of $5.1 billion, one of the biggest trends is Account Takeover, or ATO.
In the age of huge data breaches, consumers expect the businesses they patronize to protect their personal information. In fact, 55% of consumers who’ve experienced an ATO attack say they stopped shopping with that merchant altogether. Making matters worse, those affected by fraud are the most loyal repeat customers, according to our consumer survey. They are the ones who are most likely to have enrolled in loyalty programs and trusted a merchant enough to store their credit card information on their platform. Breaching this trust reflects poorly on a brand and leads to the loss of a customer's entire lifetime value.
Account takeover fraud uses some disturbing tactics. Fraudsters might try “brute force” to access an account by using bots that try millions of passwords every second. They might actually have the customer’s password from the dark web, in which case they can log in undetected. Once inside, they often change several information fields at once, such as email and shipping address. By using fraud prevention technology that can identify these patterns, merchants can stop bad actors before they reach checkout and maintain the trust of their best customers.
Tip #2 - Provide today’s customers with the friction-free process they expect
By now, we all know that millennials are a powerful consumer group. These digital natives make more than half of their purchases online, more than any other generation, and they expect a seamless shopping journey. In fact, 67% cite poor customer experience as a reason for cart abandonment.
And they don’t stay silent about their disappointments. Twitter, Facebook, and other social channels have become a platform for consumers to voice their dissatisfaction. Since social media is instantaneous, accessible and public, all of the negative feedback appears quickly on the merchant’s social channels for all to read. What were once isolated customer complaints can now cause a public storm surrounding a brand’s service - one that’s hard to unravel.
To excel in an era where no one tolerates delay, merchants need a way to accurately assess the risk of fraud. And they need to do it fast, without compromising the customer experience. That’s why fraud prevention solutions that can analyze a myriad data points in real-time and provide a precise and instant decision have arrived. By eliminating the risk of fraud, a merchant removes a huge obstacle in providing the checkout that customers expect.
TIP #3 - Meet the next generation of shoppers on their favorite channels
Mobile commerce, or mCommerce, is growing at a rapid pace and is expected to surpass desktop eCommerce spending by 2021. Merchants are rising to the challenge, optimizing the shopping experience with mobile-ready sites and dedicated apps. On the fraud front, however, mobile devices open up new vulnerabilities.
Take the case of digital goods: When buying an airline ticket, a customer can use their smartphone at all stages of the shopping cycle. First, they might place their order through an app. Next, they might ask to verify their identity through multi-factor authentication by text message. Once they’ve made the purchase, the ticket can be instantly delivered to them via SMS or email. Finally, they present an on-screen QR code when boarding the plane, train, or bus. Every part of this purchase is conducted using one single device. So, if a fraudster gains access to a customer’s device, they are often able to evade legacy fraud solutions that are unfamiliar with the complexity of mobile fraud.
Though mCommerce poses new fraud risks, its popularity means merchants must rise to the challenge. In order to meet customers on their favorite channels, a solution needs to be adept at identifying mobile-specific fraud patterns. For example, while IP address is a weak indicator of an on-the-move mobile user, cross-referencing BIN country with the keyboard language can help corroborate a shopper’s identity. As more consumers make mobile purchases, a merchant has to keep pace with the evolving complexities of the purchase journey in order to stay competitive.
TIP #4 - Leverage your global brand potential
The highest growth levels and opportunities for cross-border eCommerce are outside of the US and North America. But as global consumption grows in volume, many merchants are wary of expanding overseas and into new markets, be it for fear of risk and or a general unfamiliarity with a foreign consumer base.
As a result, many retailers choose to limit their offerings to those with domestic shipping addresses or credit cards. Only 36% of American online retailers offer their goods to cross-border shoppers, relying on geo-restriction mechanisms to block potential purchases. But failure to cater to new markets not only stunts growth. It can also negatively impact a brand in the blocked market and beyond.
To overcome the fraud challenges associated with cross-border eCommerce, it’s crucial to recognize the unique patterns of international consumers. For example, many rule-based fraud solutions automatically reject orders destined for reshippers, which are deemed suspicious. However, many legitimate customers often use reshippers in places where delivery isn’t available. In these cases, using unique, local data points can verify the authenticity of the order. This is just one way that a solution with a proven international track record can support growth into new, untapped markets with little, or no added risk.
By employing an end-to-end, flexible fraud management solution, retailers can both protect and grow their brand and reputation. And, as fraud evolves, so should a merchant’s prevention efforts. Legacy solutions that are clumsy and often inaccurate, will ultimately send customers to the competition. Your customers deserve better and so do you. To learn more about eCommerce fraud prevention, check out our Resource Center.
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