Fraud Prevention’s Biggest Downfall ... And How to Avoid It
Hardly a week goes by without hearing of a data breach or a warning to consumers about protecting vulnerable data from cybercriminals. There have been more than 18 million fraud claims between 2001–2014, and fraudsters are continuing to find creative new ways to take advantage of customers and businesses.
To accommodate tight budgets and limited staff, many e-commerce merchants aim for an inexpensive solution by simply layering multiple fraud prevention strategies. However, what often results from this piecemeal approach is fragmented, outdated coverage that does little to achieve its intended purpose.
If merchants instead adopt a holistic approach to fraud management — implementing a single, comprehensive solution — they can improve fraud protection and online commerce while enhancing the customer experience.
Fraud Prevention Solutions: More Isn’t Always Better
Online retailers certainly haven’t ignored the risk of e-commerce fraud — many have implemented solutions to try to prevent it. So why does card-not-present (CNP) fraud continue to be such a problem?
Typically, it’s because online retailers have stitched various fraud protection solutions together as new threats have emerged — trying to update older systems by layering on newer fraud filters. There are a few downfalls to this approach:
Older fraud protection systems generally use outdated technology that just isn’t compatible with technological advancements or savvy fraudsters. Because of this, the systems struggle with differentiating between true customers and fraudsters, and they’re also unable to analyze critical customer data and use it to make transactional decisions — even with the help of new filters. With these deficiencies, layered systems almost always result in more headaches than help for e-commerce merchants.
Inflexibility Across Channels
Piecemeal systems don’t account for the unique risk levels for each online channel (e.g., web, mobile, desktop) and their varying requirements for fraud protection. If merchants add on to their systems without accounting for these differences, filters may be unable to share valuable data, insights and fraud warnings across channels — and that means fraudulent transactions can be processed and legitimate ones can be denied.
Increased Customer Friction
Customers appreciate fraud protection, but not when it impedes their purchases. Most customers will tolerate a single identity credential for authentication purposes, but not much more than that. Unfortunately, layered fraud solutions tend to increase hurdles, making it more challenging for customers to enter retail sites and make purchases. The result? Merchants risk frustrating the legitimate shoppers that power their reputation and bottom line.
The Solution: Comprehensive Fraud Prevention
When merchants try to piece together a fraud prevention system, the result is fragmented at best and ineffective at worst. Add to that the risk of alienating customers due to increased friction, and merchants may exacerbate the very problem they were trying to solve. And without a solid line of defense against fraudsters, merchants create vulnerabilities that fraudsters can easily exploit.
Instead, merchants should implement a single, integrated fraud prevention solution that effectively fights CNP fraud and identity theft across channels. And when that solution combines advanced machine learning with in-depth human analysis, the outcome is an ever-evolving approach that can successfully detect the unique fraud patterns across multiple sales channels and streamline the customer experience.
The result? Effective fraud protection that keeps customers happy.
ClearSale’s solution employs this multilevel approach to successfully identify all fraud attempts, regardless of where it originates. Serving as the front line of defense for your business, ClearSale has perfected the balance of successful fraud management and a seamless customer experience.
Talk with one of our credit card fraud analysts today to learn how our fraud prevention approach keeps pace with even the fastest moving cybercriminals and ensures your business is protected against fraud and false declines.