Looking at the current ecommerce fraud market scenario, fraud attacks have significantly increased. How do merchants prevent sophisticated online scams?
Current insight into ecommerce fraud and risks trends of online buying behavior are becoming a serious concern for many businesses. The impact of COVID-19 on the online marketplace is primarily between distinguishing valuable customers from fraudsters. These and more are the insights are given by Forter’s recently published Fraud Attack Index – with in-depth data on the ecommerce fraud ecosystem.
The new customer account represents nearly 30% of the total transactions – which is 5X compared to the pre-COVID-19 times. Although it is beneficial for retailers, however, the traders that are using legacy fraud prevention
solutions are most likely to miss out on parts of this revenue. This is due to the high rate of false declines. Legacy systems have a shortage of data for new customers and hence, they can’t clearly distinguish between legitimate customers and fraudsters. The transactions rate driven by the consumer who shifted from physical stores to online is camouflaging the increased number of fraud cases and attacks.
Undoubtedly, more retailers are leading to a false sense of security. Transaction rates are dipping by almost 97% compared to H1 2019. Even scam attack rates in the hospitality sector have doubled – with the hotel fraud attacks rising to 139%, and airline fraud cases increased to 144%.
The study highlighted that policy abuse, including promotion abuse, returns abuse, and reseller abuse, are projected to increase during the upcoming holiday season. This is valid for account takeover (ATO) cases as well. Besides, the omnichannel fraud is rising as the BOPIS patterns surging up to 55%.
As mentioned by Michael Reitblat, CEO at Forter, in the company blog post – “A rapid rise in new customer accounts, coupled with having to pivot quickly from brick-and-mortar to online sales channels, put unprecedented stress on merchants as they tried to perfect the e-commerce experience.”
Basically, new customer service lay open to significant ecommerce fraud cases. Michael Reitblat also mentioned, “It is clear from what we’ve seen that some retailers were more agile and prepared for this than others, quickly introducing new services such as curbside pickup and Buy Online, Pick-up In-Store, in a bid to retain new customers.”
Ecommerce scams have decreased in the percentage of total transactions; however, the number of attacks has spiked. E-commerce merchants are expected to deliver value and frictionless customer experiences. This is only possible without the intervention of any fraud prevention. In its essence, merchants need to prioritize functioning with integrated, identity-based fraud prevention platforms.
Issues associated with fraud and policy abuse have magnified in this unprecedented time amid the economic woes.
Sophisticated scams efforts use synthetic identities and friendly fraud to make the most of businesses. Leveraging machine learning, behavioral analytics, and big data refined by data analysts, companies can remain afloat – staying ahead of policy abusers and fraudsters.