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How many times have you canceled a transaction that Shopify flagged as an elevated fraud risk, only to find out that it was perfectly legitimate? How often do customers call you asking why their order was declined, leading you to discover that Shopify falsely labeled it as fraudulent?
If you’re relying on Shopify’s free Fraud Analysis tool to protect your business from fraud, you may be surprised to learn just how error-prone their system truly is — and how much money, time, and headache it may be unnecessarily costing you and your customers.
NoFraud collected and analyzed data from over 10 million transactions that have gone through both Shopify’s and NoFraud’s fraud prevention systems and compared the accuracy of the decisions generated. The statistics are staggering:
- 23.8% of all orders classified as “high risk” by Shopify received a “pass” by NoFraud, with a chargeback guarantee.
- A whopping 84.4% of all orders that Shopify deemed “medium risk” were, in fact, safe to ship, backed by our chargeback guarantee.
- In the footwear industry alone, Shopify’s Fraud Analysis issued a wrong decision 56% of the time!
Here are the stats broken down by industry:
- Footwear: 56%
- Appliances: 36%
- Wigs & extensions: 35%
- Sporting goods: 35%
- Apparel: 28%
- Smoke & vape: 23%
- Nutritional supplements: 23%
- Auto parts: 21%
- Audio equipment: 20%
- Cosmetics: 17%
You may be wondering, “How do these error rates truly affect my business?”
The truth is, a false decline can cause more harm than just the loss of profit on one order. A Javelin survey of 3,200 U.S. consumers revealed that 32% of respondents would not shop with a merchant again if their card was declined. In today’s competitive eCommerce landscape, precise fraud prevention is a must if companies want to retain a loyal customer base and generate repeat business.
And, especially if you’re in an industry that is particularly susceptible to fraud, the sad reality is that Shopify’s free tool may be hurting you almost as much as it’s helping you.
Why is NoFraud better?
While Shopify’s tool can be useful for identifying obvious fraud (think IP proxy use, multiple card attempts, different billing & shipping addresses), their technology is not robust or up-to-date enough to address the increasingly complex methods fraudsters are using today. Moreover, Shopify requires you to manually review each flagged order, while giving you only basic clues as to why the transaction may be illegitimate.
Shopify’s Fraud Tool Analysis Indicators
- Characteristics of this order are similar to fraudulent orders observed in the past
- Card Verification Value (CVV) is correct
- Billing address or credit card’s address wasn’t available
- Billing address ZIP or postal code isn’t available to match with credit card’s registered address
NoFraud Analysis Example
In contrast, NoFraud’s advanced technology enables you to approve more valid orders with cutting-edge fraud detection, saves you time by eliminating onerous manual review, and backs every “pass” decision with our 100% chargeback guarantee. In other words, in the unlikely scenario that NoFraud did not catch a fraudulent charge that Shopify did, we’ll refund the chargeback in its entirety.
Here’s a side-by-side comparison of the two solutions:
|Identifies fraud due to suspicious IP proxy use|
|Identifies fraud due to multiple card attempts|
|Identifies fraud due to discrepancies in billing & shipping addresses|
|Employs enriched data from device fingerprinting technology to catch fraud|
|Analyzes data from third-party sources to glean deeper insight into one data point (ex. who lives at that address, who owns that cell phone line, etc.)|
|Employs human oversight by experienced fraud analysts that will spot a potential false decline and feed the data back for enhanced fraud detection precision|
|Eliminates the need for additional manual review of transactions to determine fraud|
|Provides simple, actionable decisions of Pass or Fail|
|Has a 99.5%+ accuracy rate|
|Includes a Chargeback Protection Guarantee: full reimbursement if any chargebacks manage to pass through undetected|
Below is a guest post from one of our partners, Rand Marketing:
To experts in the Magento e-commerce platform, the release of Magento 2.0 has been a bittersweet experience. We’re all very excited to see the evolution of Magento, especially after waiting so long for this new version to be released. On the other hand, adoption has been a very slow process, and Magento 1.9.2.x is still the recommended version for most developers.
In November, I wrote a piece about the official deployment of Magento 2.0 officially being made available for public consumption. In March, I wrote another article about Magento 2.0 building up steam, and getting closer to being useful for the mainstream. In April, shortly after this year’s Magento Imagine conference, EyeMagine, posted that “Specifically, there are over 1,000 open known issues in the Magento 2 codebase, as of writing this article. (more…)