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Is Full Service Fraud Prevention Right for my Business?
The pandemic-driven increase in eCommerce activity and the gaining popularity of new forms of digital payments has created more opportunity than ever for fraud. Retailers have come a long way from “Pay and Chase” fraud prevention, but so have fraudsters. As added security to in-person credit card use gets more sophisticated, criminals have turned their attention online and are constantly inventing new ways to commit card not present (CNP) fraud, account takeovers, identity theft, and bot attacks, amongst other schemes.
As potential payoffs increase, and the cost of cyber attacks decrease, fraudsters are only becoming more incentivized. The lack of aggressive prosecution for online payment fraud serves to further embolden fraudsters. According to LexusNexus, US retailers experienced a 9% year-over-year increase in the average volume of monthly fraud attacks, in 2020. So how can eCommerce businesses protect themselves?
Protection Against Chargebacks
Chargebacks usually occur when a customer disputes a charge with their financial institution. Often, chargebacks are a result of an unauthorized charge due to fraudulent activity. Less frequently, a chargeback can also result from merchant error, such as accidentally running a charge through twice, or by a legitimate customer who is dissatisfied with the product or service.
In most cases, being hit with chargebacks is a telltale sign of inadequate fraud prevention. While there are many technologies available to merchants via their payment gateways, such as Auth.net’s Fraud Detection Suite or Address Verification Systems, being able to properly discern real fraud from risky-looking, but safe transactions requires training and true detective skills.
A full service fraud prevention solution, such as NoFraud, eliminates chargebacks by analyzing every transaction for signs of fraud in real-time. Using advanced technologies, such as machine learning, geolocation and device recognition, NoFraud’s AI solution can detect behavioral patterns and produce predictive analytics to preemptively protect their customers from fraud and emerging threats.
In addition to reducing, often eliminating, chargebacks, a full service fraud prevention solution offers a financial guarantee against chargebacks. When an order that was approved by the system results in a chargeback, the merchant will be reimbursed for the loss. Many merchants also opt in to use NoFraud’s Chargeback Management service that uses industry best practices to win chargeback disputes on behalf of their customers, thereby relieving them of all chargeback-related tasks and allowing them to focus on growing their business and improving customer experiences.
Protection Against Friendly Fraud
Friendly Fraud, which isn’t very amicable at all, is carried out by legitimate customers seeking an easy refund. Common claims involve fraudulent “Items not Received” (INR), or “Item not as Described” (IND) complaints.
To combat friendly fraud, merchants should take precautions, such as providing accurate item descriptions and images, and utilizing trackable shipping options.
A full service fraud prevention solution can further assist merchants in avoiding friendly fraud by tapping into proprietary data loops that track consumer behavior across regions and industries. NoFraud employs deep learning methods to continuously improve and adapt algorithms to keep merchants up to date with potential threats, and can advise customers on industry best practices to avoid INR and IND fraud.
Protection Against False Declines
False Declines, otherwise referred to as False Positives, are the rejection of legitimate customers due to suspicions of fraud. They are often the result of setting rigid risk rules or overly convervativefraud prevention thresholds.
Many eCommerce businesses are unaware that up to 15% of good business is lost to false declines, according to research by Javelin. Legitimate shoppers who are declined, simply opt to take their current and future business elsewhere and don’t return to the site that declined them.
To prevent fraud, many eCommerce businesses automatically reject high risk orders, unaware of the number of good orders that are being discarded along with the bad ones. A full service solution, employs a precise decision engine coupled with expert human analyst oversight to legitimize even high risk orders. Prioritizing ‘order approval’ over ‘order rejection’ enables NoFraud to boast the industry’s highest approval rate.
Alleviating Manual Review
Manual Review is the time-consuming, tedious process of reviewing individual transactions for signs of fraud. Looking up shipping addresses, spending time on Google, sometimes reaching out to customers in an attempt to verify their identity.
Most eCommerce businesses managing fraud prevention in-house will manually review a subset of orders to mitigate fraud and false declines. However, manual review generally exceeds the purview of a typical merchant or employee, often diverting them from their primary tasks. Manual review also leads to fulfillment and shipping delays and is not easily scalable during periods of orders volume spikes, such as during a sale or holiday season.
A full service fraud prevention solution, such as NoFraud, provides immediate decisions for over 99.5% of transactions, not scores. The remaining 0.05% of orders is reviewed internally by NoFraud’s staff and a final decision is provided within a short period of time. This entirely eliminates merchant manual review and frees up internal resources to focus on revenue generating tasks.
Reducing Cart Abandonment
Cart Abandonment, or Checkout Abandonment, refers to unstarted or uncompleted checkouts. Shoppers may browse a site and put items in a shopping cart only to abandon the cart before or during checkout.
According to Baymard Institute research conducted on abandoned carts, 70% of shopping carts get abandoned. Sending cart abandonment emails is an effective way to recover abandoned carts. However, being reactive is less effective than being proactive. Finance Online estimates that $260 billion of revenue lost to abandoned carts is recoverable by improving customers’ checkout experiences.
A full service fraud prevention solution removes friction and improves customer experiences resulting in less abandonments. NoFraud offers its users a complimentary Checkout upgrade that increases conversions by 55%. NoFraud Checkout is sleek, easy to use, and offers customers the opportunity to check out with one click. It is optimized for increased conversion and higher approval rates by adapting in real-time to customer risk levels.
Full service fraud prevention is a good fit for any eCommerce business seeking to free up internal resources and increase approval rates and revenue. Allowing the fraud experts to handle fraud, not only eliminates fraud concerns and liability, but increases ROI by unblocking false declines and reducing cart abandonment.
Learn how easy it is to start using NoFraud’s full service fraud prevention solution HERE.