Online retailers and brands face a challenging environment as inflation makes shoppers more price-sensitive and increasingly willing to switch brands. E-commerce growth has also slowed somewhat since the early-pandemic boom, and online shoppers’ concerns about payment fraud, scams, and data protection have grown. More than half of consumers in the State of Consumer Attitudes on E-commerce, Fraud & CX 2022 said the possibility of scams and concerns about the legitimacy of websites had deterred them from making an online purchase during the past 12 months. In 2021, less than half of consumers said the same.
Three key areas of evolving concern are payment fraud, online scams, and data security. Knowing how these worries correlate with fraud and cybercrime trends can help retailers find ways to reassure consumers.
Changing payment fraud worries
The early months of the pandemic saw a rapid shift to online shopping and a concurrent explosion of fraud as criminals sought to prey on consumers’ confusion and, in many cases, their inexperience with e-commerce. Between March 2020 and March 2021, 13% of consumers made their first online purchase, and 43% of experienced e-commerce consumers started buying more online.
As a whole, these shoppers were aware of the potential for fraud: 81% said they never entered their personal data on an unverified site and 36% had abandoned at least one online cart because they didn’t trust the site with their credit card information.
By May 2022, the proportion of consumers who had abandoned their cart because of mistrust fell to 17%. That’s not due to a decrease in CNP fraud, which continues to rise and now costs 3.6% of global e-commerce revenue, per the 2022 Merchant Resource Council Global Payments and Fraud Report. Instead, the decrease in trust-related cart abandonments may be related to consumers’ increasing adoption of digital wallets, which don’t expose card data to websites during checkout. In May 2022, 70% said they preferred paying at unfamiliar sites with their digital wallets.
Rising fears of online scams
In March 2021, 49% of consumer attitudes survey respondents said they’d been deterred from doing more online shopping by the possibility of online scams, and 42% said “not knowing if the website is legitimate or not” had also been a deterrent to buying more online. At the time, it was possible to look at these numbers and wonder if they might decrease year over year as shoppers who had done most of their shopping in person before COVID lockdowns became more comfortable making purchases online.
Instead, those figures rose dramatically. By May 2022, worries about website legitimacy had deterred 58% of respondents from buying something online, and 56% said they were put off by the risk of online scams. This change tracks with the increase in phishing websites and social commerce profiles impersonating brands and retailers. According to the Federal Trade Commission, U.S. consumers lost $8.8 billion to scams in 2022, “up 30% over the year before.”
The biggest factor in rising losses to scams was a surge of business impostor scams. In 2020, U.S. consumers were tricked out of $196 million by criminals posing as trusted brands and retailers on websites, social media, and other channels to steal payment data or sell counterfeit goods. By 2022, losses from business impostor scams reached $660 million.
Growing data security concerns
Besides the potential for payment fraud and scams, online shoppers also worry more about the risk of data breaches. In the March 2021 survey, 34% said not knowing where their data was being stored was a deterrent to shopping online more often. By May 2022, 39% of respondents said the same.
That increase in concern may be related to the ongoing high number of data breaches. While there were fewer breaches overall in 2022 than in 2021, the Identity Theft Resource Center found that the total number of people affected rose by more than 41%, to more than 422 million data breach victims in 2022. Exposed and stolen data can lead to CNP fraud, account takeover fraud, and identity theft. As long as data breaches continue to occur, make headlines, and lead to consumer identity theft, this will likely be an ongoing concern for a sizable number of e-commerce consumers.
Earning and keeping customers’ trust
These best practices can protect your business from cybercriminals and strengthen your customers’ trust and loyalty.
Accept digital wallet and other alternative payment options. Adding digital wallets to your checkout is an easy way to build trust. In the May 2022 consumer attitudes survey, 70% of online shoppers said that digital wallet options make them feel more secure when ordering online. On the other hand, a lack of digital wallet options can drive customers away: 55% of consumers in the survey said they would consider abandoning a purchase with an unfamiliar website that only accepted credit card payments.
Monitor your brand continuously. Websites and social commerce accounts that impersonate your store or brand can steal your customers’ credit card information, sell them low-quality knockoffs, and erode your reputation while cutting into your revenue. Because it’s so easy for scammers to quickly set up impostor sites and social profiles, it can be difficult to stay ahead of them, especially for better-known brands. Consider working with a brand-monitoring partner to detect and shut down impostor accounts and websites.
Show customers you take their data privacy seriously. Customers want to know that stores are protecting their information, but many websites don’t disclose any security practices that might reassure shoppers. 76% of respondents in the May 2022 survey said they feel more comfortable sharing their personal data with online stores that display their security certification. The solution can be as simple as adding a badge from your cybersecurity vendor to your checkout and about pages.
Regardless of how consumer sentiment about security and fraud evolves over time, customers will continue to feel most comfortable with retailers and brands they trust. By giving your customers ways to pay without exposing their card data, identifying and taking down impostor accounts, and showing your store’s security bona fides, you can maintain loyalty and repeat business even in a challenging e-commerce environment.
Original article at: https://streetfightmag.com/2023/04/26/e-commerce-retailers-need-to-address-shoppers-rising-security-concerns/