eCommerce Boom Brings Unwelcome boom in eCommerce Fraud

The ecommerce boom has been one of the most exciting business developments of the past decade. After being limited to niche markets for many years, eCommerce has become a mainstream phenomenon.

 But, as with most things in life and business, hard earned rewards often come with a few downsides. Merchants are finding that this exponential growth also brings with it increased risks for their businesses as well.

There are a number of factors that have contributed to the meteoric rise of eCommerce in recent years. These include the rise of internet penetration in developing economies, the growth of mobile commerce, the growth of e-commerce marketplaces and the pandemic fueled growth of global spending on e-commerce.

The prevalence of data-rich e-commerce sites and the ease with which valuable information can be stolen makes these sites ideal targets for cybercrime. A 2018 report has shown that over 90% of website login attempts were actually initiated by fraudsters. Using sophisticated tools, hackers try to take over consumer accounts who have stored profiles on merchants' sites. 

Account takeover is just one example of the many types of fraud merchants are faced with. They're also plagued with credit card fraud, mobile fraud, and friendly fraud schemes. These schemes and the costs involved make it hard for merchants to maximize eCommerce profits, even with the increase in traffic.

Every one of these fraud scenarios lead to an increase in chargebacks. Chargebacks are both time-consuming and costly for merchants as every $1 lost costs merchants $3.60 is losses and fees. Chargebacks hurt merchants’ bottom line. But they also could negatively impact their eCommerce merchant account if it were to be frozen or shut down due to high chargeback ratios.

And unfortunately, fraudsters are getting better at their craft, making it more important than ever to invest in e-commerce fraud prevention software.

If your business accepts credit cards online, you need to be aware of the growing fraud threat to protect your bottom line. 

What is Ecommerce Fraud?

Ecommerce fraud is a term used to describe the various tricks scammers use to steal data, products, and money. 

The most sophisticated cyber criminals are targeting e-commerce companies, because these businesses have large pools of valuable data, are often less vigilant about online security, and have significant amounts of financial resources to be stolen. 

Fortunately, there are several ways that businesses can protect themselves from these dangers and prevent loss of revenue. There are two main types of prevention that work best: preventive measures and detection methods.

Ecommerce Fraud Risk Factors

In recent years, the incidence of credit card fraud has increased exponentially with the eCommerce boom. If a business is not proactive in monitoring for potential threats, they could be left defenseless and potentially lose everything.  

As with any other business venture, there are always risks involved when operating an ecommerce store. But one significant difference is the prevalence of credit card fraud. 

When a company operates solely online, it’s important to monitor for potential threats that may come as a result of online transactions. E-commerce merchants need to be prepared to defend themselves from cyber-attacks and put in place risk management and fraud prevention measures to safeguard their businesses.

Industry security standards continue to improve, as evidenced with the recent upgrade to PCI Data Security Standards v4.0. In addition, fraud detection and prevention tools are also becoming more sophisticated and technologically advanced.

But creating a secure environment, unfortunately, adds increased friction at checkout. According to Forrester Research, merchants miss out on upwards of $18 billion of unrealized sales due to cart abandonment.

 Often, merchants forgo robust fraud measures in favor of creating a frictionless customer experience. It’s important to manage your customer’s expectations when they make an online purchase so you can maintain their trust in your brand and product.  

Merchants who successfully combat fraud and create a frictionless experience will protect themselves and win consumer loyalty.

Top Strategies for Ecommerce Fraud Protection

It’s important to be proactive in working to protect your eCommerce business from fraud. Yes, fraud is an ever-evolving beast. Countering this trend is the advent of Artificial Intelligence as a potent weapon against cyber crime. 

Merchants are leaving one-size-fits-all fraud detection behind and opting for a more targeted approach. AI-driven e-commerce fraud detection systems are being adopted by merchants to protect their businesses from the dangers of cyber crime.

Ai and Machine Learning allows fraud detection to become a more targeted security process. This also helps to reduce false declines. Rather than flagging all potentially fraudulent transactions, the way most blanket solutions would, this approach analyzes multiple data points to reach a conclusion.

 This allows merchants to create a more individualized screening of each payment transaction. But it also allows them to optimize the checkout process for a seamless customer experience. 

Conclusion

The ecommerce boom has brought with it an increased risk for fraud, which is why it is crucial to stay vigilant and take preventative measures to avoid being a victim of this type of fraud. 

One of the best ways to protect yourself from fraud is to partner with an experienced and trusted third party payment processor. Another is to make sure you're accepting payments with a secure and 100% PCI Compliant payment gateway. Additionally, implement a robust, and multi-layered fraud detection system.Together, these strategies will help reduce your exposure to fraud by monitoring account behavior and analyzing customer’s buying habits.  

MonerePay can help you do all three. We’re experienced and prepared to exceed your eCommerce payment processing needs. Our PCI Level 1 certified solution helps make fraud protection a breeze. Our secure gateway is packed full of nimble features complemented by an intuitive user interface. And our hosted payment page helps to reduce your PCI Compliance scope so remaining secure is achievable. 

These are just a few ways that you can help protect yourself from the risk of ecommerce fraud. To learn more about how we can help you optimize your merchant account to do more than just accept payments, call us today!