Can you afford not to have eCommerce fraud protection? In this article, find out the real-world consequences of eCommerce fraud and how to prevent them.
If your business accepts any form of online payments, you are at risk for fraud. The amount of risk involved depends on the size of your company and the types of products you sell, but every business is taking on a certain level of risk when they choose to accept online payments. The 2020 AFP Payments Fraud and Control Survey found that 81 percent of organizations were targets of payments fraud in 2019.
In today’s market, businesses need an e-commerce fraud protection solution to prevent revenue loss. Keep reading to learn how to enhance your business' defense system.
Digital Payment Trends
It's no secret that the payment industry is shifting toward digital, card-not-present (CNP) payment avenues. In 2020, there’s been a surge in online sales involving CNP transactions.
Experts predict that PCs will remain a primary source of e-commerce. More payments via smartphones, voice assistants, vehicles, and wearable technology is also expected.
What Is Payment Fraud?
Payment fraud describes all types of illegal or false transactions perpetrated by cybercriminals. This robs the victim of personal property, sensitive information, money, and personal interests.
Criminals achieve this theft in three primary ways.
- Chargebacks: Chargeback fraud can be explained as a request from an issuing bank to the business to refund a purchase back to the original customer. Fraudsters will request chargebacks for items they didn’t purchase so the refund goes straight into their account.
- Stolen card: Fraudsters will use stolen cards or credentials to create fake accounts and purchase products. The thief may have a physical card, but it's more likely that they either purchased or stole the card information electronically.
- Overpayments: Overpayment fraud is closely-related to stolen card fraud. Fraudsters will pretend to require the services of a fake third-party company along with the purchase of a product. The thief will pay the seller for the product, with the addition of an extra payment for the fake third-party service. When the real cardholder notices the fraudulent transaction on their bank statement, they're refunded for the purchase despite already paying the fake third-party company.
How These Factors Play a Role in the Hidden Cost of Fraud
As companies increase access security, they also risk higher incidents of false denials. This means legitimate customers are denied access because they're falsely flagged as a risk.
This results in more complicated account access and transaction processing. Today’s consumers have many choices. If the checkout procedure on your website is too complex, it's likely that potential customers will leave to find an acceptable alternative.
Significant rises in fraud attacks are causing steep losses for medium to enterprise-level companies. Additionally, fraud attacks are starting to increase even among small online businesses as well. A big concern is the rising average number of fraud attempts that are successful.
While online shopping has surged since the COVID-19 pandemic struck in early-2020, the risk of payment fraud has also increased. As consumers avoid physical contact, hackers have ramped up identity theft. They use the stolen information to set up fake accounts and account takeovers. This means that businesses “sell” their product or service, but then don’t receive payment.
Many businesses are purchasing fraud protection platforms to protect their revenue. If you're worried about the cost/benefit of paying for these services, check out our fraud savings calculator. This can help you make an informed decision.
What to Look for in eCommerce Fraud Protection?
Staying on top of the latest fraud risks is time-consuming and difficult. The systems you used yesterday may become obsolete by tomorrow. Purchasing a fraud protection solution for your business will allow you to focus all of your time and energy on growing your business.
When shopping for the best platform, there are several key features to look for. These include:
- A risk assessment score for every transaction to prevent chargeback fraud
- Authentication procedures that prevent fraud and false declines
- Advanced machine learning that analyzes data and increases filter accuracy
The ultimate goal is to stop criminals while accepting and serving real customers. This helps to protect your return on investment. It also reduces your fear of fraud and gives you peace of mind.
Do You Want Help Protecting Your eCommerce Business from Fraud?
In 2021, the need for ecommerce fraud protection has risen exponentially. Partnering with Vesta will increase approvals for your business while also protecting you from the threat of payment fraud.
Vesta is a global fintech pioneer in payment protection and account fraud. Our approval technologies optimize revenue by completely eliminating the fear of fraud. Our customers report a 20 percent average increase in revenue and 95 percent client approval rates.
Contact us today and take advantage of our 100% chargeback guarantee.