The Clearsale Blog

Retailers vs. Bots: The New Fraud Battle - ClearSale at Retail TouchPoints

Retailers vs. Bots: The New Fraud Battle - ClearSale at Retail TouchPoints

The e-Commerce industry is battling a huge wave of card-not-present fraud, and small businesses are particularly at risk. In Q2 2016, more than 450 million botnet fraud attempts were made against e-Commerce merchants worldwide, seeking out vulnerable places to steal merchandise and validate stolen payment data. Because many small businesses have no fraud protection, professional fraudsters view them as easy targets. To survive, small e-Commerce business owners must know the scope of the problem, the risks, and the best ways to fight back.

How E-Commerce Fraud Got So Bad So Fast

There are several reasons e-Commerce fraud has exploded. First, the U.S.’ transition to chip-and-PIN cards at store checkout terminals made it harder for thieves to use fake cards in stores, so they’ve pivoted to new targets. Huge data breaches around the world have yielded more stolen card numbers than ever before. To work out the expiration dates and security code numbers for those stolen card numbers, criminals now use botnets to test many cards quickly in online stores with poor anti-fraud protection.

Meanwhile, more small businesses than ever are selling online, often with little to no knowledge of the fraud threats they face. A 2016 MasterCard survey found that 60% of U.S. small businesses don’t use any online fraud prevention tools at all. That makes small online shops ideal places for fraudsters to test their stolen info by attempting purchases, either by hand or using bots.

How Fraud Kills Small E-Commerce Businesses

Small businesses face disproportionately high risks when it comes to online fraud. Because small businesses have less revenue and cash reserves than major retailers, the effects of even a few successful frauds can be devastating.

E-Commerce businesses lose revenue on each fraudulent order, of course, and if they fulfill the order before the fraud is discovered, they lose the value of the goods shipped and the cost of shipping. The damage doesn’t stop there. “Friendly fraud” orders (in which customers lie about not receiving their purchase), and purchases made with stolen card data, often get charged back through the credit card companies, and the retailer pays a bank fee for each chargeback – up to $100 per transaction. Each chargeback factors into the retailer’s chargeback ratio, which measures chargebacks against total transactions. Merchant banks use the chargeback ratio to evaluate the shop’s risk level and set the shop’s transaction processing rates. The higher the ratio, the higher the risk and the costs. Meanwhile, if the shop earns a reputation as easy to defraud, more criminals and botnets will target it, pushing the chargeback ratio and losses higher.

Keep reading.

New Call-to-action

You may also like

How Backtesting Can Improve Fraud Prevention

How Backtesting Can Improve Fraud Prevention

They say hindsight is 20/20, and that’s especially true for e-commerce merchants looking to increase their approval rates and decrease fraudulent transactions. It’s easy to look back at..

Is Fraud Risk Scaring You Away From International Shipping?

Is Fraud Risk Scaring You Away From International Shipping?

With cross-border shopping estimated to make up 20% of e-commerce in 2022, many merchants are right to consider expanding into other countries. So what’s stopping them from pulling the trigger?

U.S. shoppers say they'll trade privacy (but not convenience) for better e-commerce fraud protection

U.S. shoppers say they'll trade privacy (but not convenience) for better e-commerce fraud protection

As more consumer spending shifts to e-commerce, merchants need to strike a balance between fraud protection and customer experience. A recent survey just before business closures swept the U.S...

What does effective B2C marketing look like now? Messaging is only part of the story.

What does effective B2C marketing look like now? Messaging is only part of the story.

As more consumers shop online, many companies are pivoting their marketing strategies to focus on digital channels. But smart marketing now requires more than simply reallocating resources for..

ClearSale and BigCommerce Partner to Prepare E-Commerce Merchants for the Holidays

ClearSale and BigCommerce Partner to Prepare E-Commerce Merchants for the Holidays

Fraud protection leader joins e-commerce platform powerhouse to help merchants accentuate customer experience while preventing fraud this seasonMIAMI, FL (September 11, 2020) -- Global fraud..

Survey: Men Experience More Online Shopping Fraud

Survey: Men Experience More Online Shopping Fraud

Male shoppers are more likely to experience online shopping fraud than female shoppers. New research from ClearSale of over a thousand U.S. consumers that shop online at least once every few..

Preparing Your E-Commerce Store for the Holiday Season

Preparing Your E-Commerce Store for the Holiday Season

It might still be summer on the calendar, but the holiday shopping season is just around the corner.  Are you ready?

The Four Ways Fraudsters Try to Snag Online Shoppers - and How You Can Avoid Them

The Four Ways Fraudsters Try to Snag Online Shoppers - and How You Can Avoid Them

The COVID-19 pandemic has got more Australians shopping online, leaving them increasingly vulnerable to scammers poised to take advantage. Understanding the four key ways these fraudsters can..

Canadians Concerned About Fraud when Shopping Online: Survey

Canadians Concerned About Fraud when Shopping Online: Survey

A new survey suggests Canadians are much more concerned about the safety of online shopping compared with consumers in the United States.

Want to write
for our blog?

Please review our writers' guidelines
https://www2.clear.sale/press/clearsale-guest-blog-guidelines
and then email guestwriter@clear.sale with your pitch!

Subscribe to our blog