It’s safe to say consumers love to shop online. According to recent U.S. Census Bureau data, eCommerce sales climbed to a record high of $453.5 billion in 2017 – a 16% increase over the previous year. Unfortunately, this growth has been overshadowed by a very big problem: online shopping fraud.
Recent Experian reports revealed that online shopping fraud rose 30% year over year. In addition, 63% of businesses acknowledged that they are experiencing a real problem with fraud, either the same or more than a year ago. While the U.S. transition to EMV technology has definitely helped to reduce point-of-sale (POS) card fraud, card-not-present (CNP) has escalated rapidly. Chargebacks911, a leading dispute mitigation and loss prevention firm, has warned that the ever-growing CNP fraud could offset revenue gains. They went on to say that the only action that will help control this fraud is if merchants begin to take proactive steps to identify and prevent it.
Monica Eaton-Cardone, co-founder and Chief Operating Officer (COO) of Chargebacks911 says, “It’s critical to have an effective loss-prevention program in place to ensure fraudsters aren’t the ones getting rich off your sales and marketing investments.”
She went on to explain, “However, that’s not all you need to do. It’s equally important to continually review and reassess those anti-fraud measures to stay ahead of criminals’ evolving tactics and the many different types of potential losses, from identity theft to chargeback fraud.”
To help merchants reduce fraud risk and improve profitability, Cardone provide the following proactive steps they can follow:
- Always verify. You should always use the Address Verification System (AVS) to ensure the billing address listed on the order matches the information on file with the credit card company.
- Flag certain orders. Make sure you flag orders with foreign IP addresses, especially from China and Venezuela (they are linked to the highest risk of fraud). According to Experian, orders originating from a foreign IP address were 7 times riskier than the average.
- Use smart technology and geolocation. Using these tools will help you validate legitimate transactions so you can avoid losing sales and valuable customers.
- Optimize your business’ online ordering process. Customers appreciate security protocols, but they also dislike protocols that take too much time. It’s important to keep the order process as streamlined as possible to avoid cart abandonment.
- Dispute chargebacks. Some merchants do not worry about chargebacks, but this can quickly lead to an overwhelming amount of friendly fraud. It’s critical that you flag and scrutinize orders when you feel it is necessary.
- Seek support. Make sure you keep up with fraud prevention tools and find providers that can help you. Some payment processing providers offer assistance in protecting your business through services like high risk merchant accounts and chargeback protection programs.
Author Bio: Electronic payments expert Blair Thomas co-founded eMerchantBroker, serving both traditional and high-risk merchants. His passions include producing music, and traveling.