Customers want what they want, how they want it and when they want it.
And as technology advances, e-commerce merchants are working overtime to meet these demands. But as the shopping experience has evolved to expand across multiple channels, so has an e-commerce merchant’s fraud exposure.
Today’s merchants must understand the fraud risks each channel presents. What worked in the past to protect revenue and reputation is no longer effective. New fraud protection is needed to protect against new omnichannel fraud risks.
What Are the New Omnichannel Fraud Risks?
As merchants improve the customer experience through omnichannel e-commerce, they’ve found that fraudsters aren’t far behind, ready to take advantage of any weaknesses. Here are the top fraud risks today’s omnichannel e-commerce merchants need to know about.
Consumers are finding that after fraudsters steal their personally identifiable information from one channel, they’re using it to commit fraud on another. Consider customers’ increased demand for “gotta have it now” orders. Many merchants let customers place orders online and pick them up from the local brick-and-mortar store. Unfortunately, many merchants don’t require the customer to present the credit card used for the transaction — or even an ID — to get their goods.
Fraudsters take advantage of this lapse in security and use stolen data to purchase high-value goods online and pick up their goods in the store, often before the cardholder realizes their account has been compromised.
After buying stolen credit cards on the dark net, fraudsters will test the cards on a merchant’s website with small purchases. If the purchase goes through, the fraudster will start making large-dollar purchases. This card-testing fraud was up 200% in the first four months of 2017, compared with the same time period in 2016.
It’s becoming increasingly common for fraudsters to order high-value items online (like jewelry or electronics), remove or swap out the expensive components, and then return the item in its original packaging to the store.
With the rise in consumers making e-commerce purchases on their mobile devices — mobile e-commerce now makes up more than 50% of retail e-commerce sales — fraudsters have also turned their attention to mobile sales. For example, if a fraudster can gain access to a customer’s banking or shopping app, they’re able to take over that app and make fraudulent purchases.
Fraudsters can also use premium SMS services to charge expensive text messages directly to the victim’s bill.
How to Reduce Fraud Risks
When it comes to minimizing risk, there are several things an e-commerce merchant can do.
Track Fraud Across Channels
When e-commerce merchants track fraud across each of their channels, they’re better able to identify and bolster the weaknesses in their fraud management.
Implement Multifactor Authorization
As technology evolves at lightning-fast speed, merchants may want to consider adding multifactor authorization to their sign-in process, requiring customers to enter two or more independent credentials (like a combination of security tokens, biometric verifications and passwords).
Invest in a Robust Fraud Prevention Solution
E-commerce merchants simply must invest in a fraud management system that lets them manage, monitor and analyze every transaction in any channel, applying vast amounts of historical data to identify subtle and emerging instances of fraud.
Instead of layering basic fraud filters — which could end up making your website less secure if layered improperly — or using outdated technology that leaves your omnichannel e-commerce site vulnerable to new threats, consider implementing a solution that uses the best of human analysis and artificial intelligence.
ClearSale has the largest manual review team in the world, with more than 700 fraud analysts on duty 24/7/365 – guaranteeing timely decisions and the flexibility to handle even your toughest sales peaks. And because our teams and review processes are customized to fit your business and your industry, you get higher approval rates and safer revenue. Contact us today to find out why companies around the world trust the ClearSale solution.