Ecommerce is one of the most booming industries in the world. In 2018, it is expected that the e-commerce sector will cross the $50 billion mark. Every online retailer in the market dreams of being a successful and well-known brand. However, the scary truth remains that the more popular your brand is, the more likely it is to attract unwanted fraudsters’ attention. Online stores are undoubtedly a more comfortable and easier way to reach out to the target customers. However, security of confidential user information and other forms of ecommerce fraud have always been a significant concern. Although the ecommerce fraud rates and security threats have stabilized in recent times with merchants becoming more vigilant, it is always better to stay prepared for the worst.
Four Strategies to Reduce Ecommerce Fraud
Automated transactional risk scoring
Online retailers can utilize specific logic and settings to distinguish normal purchase behavior from risky transactions. Ecommerce fraud risk is calculated based on multiple data factors and assigned a numerical score for each transaction. The scores, which serve as relative risk indicators, determine the next course of action for that transaction according to a merchant’s preferred operating procedures.
Transactions with risk scores exceeding certain thresholds can be determined by either the merchant or the ecommerce fraud solution provider. It can then be automatically placed into different categories for further action. In the usual case, a transaction is either immediately accepted or rejected. However, in case a transaction falls in between these two categories, it can be flagged for manual review.
Post-purchase transaction management
It is important to note that the life cycle of ecommerce fraud management does not begin and end with the purchase attempt. To continue handling ecommerce fraud attempts proactively (as well as to resolve chargebacks and disputes efficiently), merchants need to have a database that can maintain detailed records. This can be used to understand transactions trending over an extended period. Re-presenting and resolving fraudulent chargebacks can be a complicated and time-consuming effort. Databases of detailed records can also help easily extract details about a transaction to help win re-presentment attempts. Also, it is essential for online merchants to evaluate the appropriate level of risk management they can administer internally versus outsource, depending on the budget, staff, and other resources available.
Adjusting fraud rules and parameters
One common pitfall to avoid is the “one and done” mentality. Too often, merchants dedicate a resource to configuring fraud parameters once but fail to ensure that the parameters are still relevant weeks, months, or years later. Fraud trends evolve rapidly, and detection tools need an equally quick response to remain effective. Regardless of which tools merchants are using to prevent ecommerce fraud, those tools should be referenced against reports and analytics on a regular basis. Online retailers must train their staff to react to critical occurrences, such as a sudden attack from a fraud ring in a particular geographical location. These may require significant—but temporary— changes to the existing ecommerce fraud settings.