BlogMay 13, 2024

Don’t Let Fraud Spoil Your Customer Experience

Remember Robin Ramirez, the mastermind behind a $40 million coupon fraud scheme that duped major brands like Procter & Gamble and Unilever? Her clever scam, which involved selling fake coupons online, seemed like a victimless crime until she was caught and sentenced to 12 years in prison. But the truth is, fraud is never victimless. It costs businesses billions annually and can damage their reputation and customer trust.


People often justify fraudulent behavior by thinking they’re just one person taking advantage of a loophole, and it won’t hurt the brand.

Lisa Washington

Lisa Washington, a fraud prevention expert and Customer Success Manager at NoFraud — who has worked with 500+ merchants — has witnessed the devastating impact of fraud on eCommerce businesses. “People often justify fraudulent behavior by thinking they’re just one person taking advantage of a loophole, and it won’t hurt the brand; they have plenty of money to spare,” Lisa notes. “But the reality is that fraud is a vicious cycle that can quickly spiral out of control. It’s like a domino effect, where one fraudulent transaction leads to another, and before you know it, you’re dealing with a full-blown fraud attack that can bring your business to its knees. And it’s not just the devastating financial losses — it’s also the damage to your reputation.” When fraudsters target your business, they’re not just stealing from you; they’re also undermining the trust and loyalty of your customers. And once that trust is broken, it’s tough to regain.

In this blog post, we’ll delve into the latest insights from Lisa as she shares:

  • The hidden costs of fraud on loyal customers
  • Eight fraud trends she’s noticing this year
  • Proactive fraud prevention strategies to fortify your business against current and emerging threats
  • How pre-gateway prevention and AI-powered detection are game-changers

The Hidden Costs of Fraud on Loyal Customers

3 Ways to Create Customer Loyalty With Effective Fraud Prevention

Fraud can have far-reaching consequences that extend beyond the initial financial loss. When a merchant is targeted by a fraud ring or experiences a one-off instance of fraud, such as policy abuse, it can impact good customers in unexpected ways.

  • False declines: Merchants may implement more aggressive fraud detection measures, which can lead to an increase in false declines, causing frustration and inconvenience to good customers whose transactions are mistakenly flagged as fraudulent.
  • Delays or cancellations: If there’s a fraud trend that’s spiraled out of control, transactions from good customers may temporarily be suspended or canceled while the merchant investigates and resolves the fraud issue. This is why it’s crucial to stay ahead of emerging threats so your team isn’t caught off guard by new patterns.
  • Reputation damage: Publicized fraud incidents can damage the merchant’s reputation, potentially leading to a loss of customer trust and confidence among good customers.
  • Increased prices or fees: Merchants may need to increase prices or implement additional fees to offset the costs of fraud prevention and mitigation, affecting good customers. They may also be wary of offering coupons or discounts.
  • Lost future sales: Good customers whose transactions are impacted by fraud prevention measures or experience delays/cancellations may take their business elsewhere, resulting in lost revenue from potential repeat business.
  • Eroded customer trust: Repeated fraud incidents can lead to a loss of customer confidence, causing good customers to question the security of their transactions.
  • Legal and regulatory issues: Fraud can lead to legal and regulatory problems, potentially impacting good customers if the merchant is forced to shut down temporarily or faces legal action.

When fraud happens, it’s not just the transaction that’s affected; it’s the whole customer relationship.

Lisa Washington

As Lisa Washington notes, “When fraud happens, it’s not just the transaction that’s affected; it’s the whole customer relationship.” By understanding the indirect consequences of fraud, merchants can better appreciate the importance of effective fraud prevention and mitigation strategies that protect both their business and their good customers.

Practical Tips for Merchants


So what can merchants do to protect themselves? Here are some practical tips:

  • Use a fraud prevention service like NoFraud that offers pre-gateway integration to catch fraudulent orders before they are processed.
  • Implement velocity rules to limit the number of orders that can be placed from a single IP address or credit card.
  • Use multi-factor authentication (MFA) or 2FA to verify customer identities.
  • Monitor orders for suspicious activity, such as multiple orders from the same IP address or credit card.
  • Use a fraud prevention expert to help identify and prevent fraud (check out advice from our Anti-Fraud Squad).

Advanced Prevention & Detection Strategies

The Power of Pre-Gateway: A Fraud Prevention Game-Changer 

A pre-gateway integration [allows us] to reject suspicious orders before they’re even created.

Lisa Washington

Pre-gateway fraud prevention is a vital weapon in the war against eCommerce fraud. By implementing a pre-gateway integration, merchants can intercept and prevent fraudulent activity in real-time before orders are processed. Lisa emphasizes, “With a pre-gateway integration, we can alert the gateway and instruct [the merchant’s] platform to reject suspicious orders before they’re even created in their system.” This proactive approach enables merchants to reclaim control, freeing them to focus on driving business growth and expanding their customer base to reach new shoppers confidently.

Reduce Fraudulent Transactions by 40% with AI-Powered Detection

Artificial intelligence (AI) is transforming the fraud prevention landscape. AI-powered fraud detection can reduce fraudulent transactions by up to 40%, saving businesses millions in potential losses. By harnessing the power of AI, merchants can strengthen their fraud prevention strategies, protect their customers, and safeguard their reputation. Here’s what AI algorithms can do:

  • Detect subtle patterns and anomalies in customer behavior, identifying potential fraud with unprecedented accuracy
  • Analyze vast amounts of data in real-time, enabling swift and effective fraud detection and prevention
  • Adapt to emerging threats and evolving fraud patterns, ensuring staying ahead of sophisticated fraudsters
  • Automate fraud detection and prevention processes, reducing manual review time and minimizing false positives
  • Provide actionable insights for fraud investigators, enabling them to focus on high-priority cases

Outsmart fraud, while elevating the customer experience. Traditional fraud prevention often creates friction for legitimate customers. With pre-gateway solutions and AI-powered detection, you can stay a step ahead of fraudsters, stopping them before they disrupt your customers’ journeys. This proactive approach safeguards your business while ensuring a seamless checkout experience. With it, you can continue to focus on building trust and loyalty with every satisfied customer.

Lisa Washington

Customer Success Manager

Lisa Washington is a Customer Success Manager at NoFraud, which means she helps eCommerce businesses eliminate chargebacks while approving more orders. Over the past ten years, Lisa has worked with over 500 merchants on understanding their unique business goals and how to optimize technology to improve their bottom line.

Ready to learn more?

Book a demo and see our accurate real-time fraud screening for eCommerce in action.

Ready to learn more?

Book a demo and see our accurate real-time fraud screening for eCommerce in action.

We offer Starter Plans for even the smallest sized businesses, including a free plan and plans that include chargeback protection for companies that process less than $50,000/month.

Businesses that process more than $50,000 in revenue/month qualify for custom pricing. Book a demo and see our accurate real-time fraud screening for eCommerce in action.

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