This article is a summary of an Accertify commissioned study, conducted by Arizent Research. The resulting whitepaper provides insights, trends, and statistics from surveyed parties, which included merchants in global companies and fraud professionals from within those companies. Participants responded to questions about how their businesses are adapting to dynamic threats and implementing measures for fraud prevention.
While fraud was an issue for merchants before the COVID-19 pandemic, the rate and array of fraudulent activity has increased dramatically. Eighty four percent1 of merchants surveyed shared they experienced an increase in fraud over the past year.
The Accertify-sponsored fraud prevention survey found that merchants are making specific, prioritized choices and investments around fraud management.
In this article, learn about the kinds of fraud that are growing and where merchants plan to make investments for fraud prevention.
The Arizent Research study highlighted three concerns that specifically relate to fraud:
- Online payment fraud was cited by 54%1 as the fraud type merchants were most concerned about.
- Refund fraud/orders-not-received fraud was the largest concern for 35%1 of merchants.
- Identity theft worried 30%1 of respondents the most.
Read on to learn more about how merchants responded to questions in these three areas.
1. Payment Fraud Is Growing
Payment fraud has been an ongoing concern. The study indicated that online payment fraud had increased the most in the past 12 months, namely by 36%1. Payment fraud is a broad category that can include many forms of fraud. In an eCommerce fraud prevention context, it is one of the most financially devastating attacks that can be brought against an online platform.
Online payment fraud can include:
- Fraudulent credit card payments
- Data theft
- Refunds / returns abuse
- Friendly fraud
- Chargebacks
- And more
Payment fraud statistics currently track global loss at around $32 billion in 2020, with forecasts projecting up to $40 billion by 2027. This type of fraud can be perpetrated internally, externally, or in collusion between both internal and external parties.
2. Refunds Abuse Is on the Rise
Survey respondents with businesses that generate more than $1 billion in annual revenue1 are more likely to report refund fraud/orders not received fraud. Numerous factors contribute to the prevalence of refund fraud:
- As more people shop online, the volume of transactions presents greater opportunity and could mean merchants have diminished abilities for comprehensive returns tracking.
- In some regions, shipping companies are not currently obtaining signatures for deliveries, which can make it difficult for merchants to verify delivered purchases.
3. Identity Theft
Merchants need to trust that customers are who they say they are. Identity fraud undermines this, as bad actors use stolen credentials or other means to infiltrate legitimate accounts or pose as users. Once identity theft has occurred, fraudulent purchases can be made. Merchants then face a cycle of chargebacks that sap resources.
Planned Investments in eCommerce Fraud Prevention
To combat the online fraud threats, it is important to have a layered approach to fraud prevention. The approach should include prediction, prevention, and protection measures. Many merchants find that the best solution is to partner with a technology vendor such as Accertify to effectively address evolving threats.
According to the survey, nearly 90%1 of merchants plan to make investments in eCommerce fraud prevention tools and resources in 2021 to combat emerging fraud trends:
- 35%1 plan to invest in 2-factor or multi-factor authentication
- 32%1 plan to invest in hiring more people, including fraud analysts
- 30%1 plan to invest in focus-on-refund fraud/orders-not-received fraud
- 30%1 plan to invest in device intelligence
- 25%1 plan to invest in bot detection
- 20%1 plan to invest in behavioral analytics
Accertify Fraud Management Solutions
Accertify’s Fraud Management Solution was specifically designed to address these eCommerce Fraud concerns and more.
Fast and Secure: the platform was built by fraud experts to outmaneuver even the most clever cybercriminals. Streamlined solutions can be deployed fast, and offer optimal security against fraudulent activities for eCommerce merchants.
Community: In addition, Accertify enables access to two of the most extensive, secure, anonymous multi-merchant positive and negative databases in the industry.
Flexibility: Fraud trends and technology change quickly. The Accertify Platform is highly flexible and is constantly evolving to adjust fraud rules in real-time to adapt to changing business needs. Those rules can be combined with machine learning models to optimize performance while still targeting fraud specific to your business.
Request a consultation to learn how implementing an eCommerce fraud prevention solution will help protect your business.
1Source: Arizent Research/PaymentsSource, December 2020/January 2021