Most Popular Reads
- The Definitive Guide to Selling on Amazon
- How To Write Product Descriptions To Grow Sales [Samples Below + Updated in 2017]
- Ecommerce Shipping: Your Step-by-Step Guide to Shipping Profitability
- Ecommerce Trends: 147 Stats Revealing How Modern Customers Shop in 2017
- How to Master Product Photography on a Tight Budget (We Did it With Less Than $50)
We’re smack dab in the middle of one of the busiest shopping times of the year. Are you feeling the thrill of more traffic, more interest, more orders? How about the stress? Whether it’s a sale, an event or a holiday, a spike in the number of visitors to your site can put a strain on your operations. And there’s one related risk that even the most diligent retailers may not budget into their preparations: increased fraud.
[Tweet "Unfortunately, boosts in traffic and sales often go hand-in-hand with a rise in fraudsters."]
Unfortunately, boosts in traffic and sales often go hand-in-hand with a rise in fraudsters. But the monetary pain of ecommerce fraud – chargebacks and their related fees – often doesn’t come until months after the actual fraud happens. Because of this, taking practical steps to protect your online store may feel less urgent than, say, setting up the marketing campaigns that will drive all the traffic in the first place.
However, there are things you can do right now to decrease your chances of fraud and reduce your workload from here on out. Here’s a practical fraud protection plan to keep your stress levels low.
Brush up on the Basics of Fraud
The first step to protecting your store is to know your enemy. Fraudsters are sophisticated, organized and move quickly, but they often repeat tactics.
Here are some common types of online fraud:
- Card testing: Fraudsters test whether batches of stolen credit card numbers are valid by making small purchases online
- E-gift card fraud: Thieves use stolen credit card details to buy online or digital gift cards and quickly drain them for cash or to buy merchandise
- Re-shipping fraud: Criminals who live in a different country than the billing address of the stolen credit card recruit someone from within the cardholder’s country to receive and reship the merchandise to the final destination
- Referral fraud: Fraudsters set up fake accounts to abuse a merchant’s referral or loyalty program
These examples give you a starting point on what to look out for, but you can also learn more about the basics of ecommerce fraud, the impact of fraud on your bottom line, and different techniques for preventing fraud.
Know your Risk Tolerance
Effective fraud prevention often involves trade-offs, and knowing the right balance for your business is key. How much time should you spend reviewing orders? How many fraud-related costs are you willing to absorb?
[Tweet "Effective fraud prevention often involves trade-offs."]
A more risk-averse approach to tackling fraud might involve reviewing more orders, which could slow your team down and require more resources. But being overly lenient in processing orders could lead to fraudsters slipping through, and you’d shoulder the costs. During high-traffic periods, these trade-offs may suddenly become more urgent than ever.
Here are some questions that will help you craft your fraud approach:
- How much fraud do you experience in normal conditions?
- How much risk does fraud pose to your business?
- What do you want your customers to experience? (Introducing security checks could lower fraud, but legitimate users may get fed up)
- How quickly do you need to move?
The answers to these questions will help you prepare for high-traffic periods, but they’re also handy for developing your overall strategy for handling fraud.
Dedicate Someone to Monitoring Fraud
If fraud prevention isn’t someone’s job already, think about giving one of your employees the task of keeping an eye out for types of orders that could raise red flags during high-traffic periods. Sometimes the simplest and most obvious signals can be effective identifiers of suspicious users, like overnight shipping or first-time shoppers. It might make sense to have someone on your customer experience or customer support team on lookout, since they’re already reviewing individual orders.
[Tweet "Sometimes the simplest and most obvious signals can be effective identifiers of suspicious users."]
Of course, not every brand new customer who wants something in a hurry is out to scam your business. To keep from incorrectly denying orders based on limited criteria, the person (or people) tasked with fraud monitoring would benefit from using a tool that can compare customer identity and behavior against a network of known bad and good users –– and then provide a real-time score based on how risky the customer is. Here’s one such ecommerce integration.
Be Aware: Shopper Habits will Change
Spikes in traffic are usually caused by a sale, promotion, holiday or other event that means shoppers may be doing things they don’t usually do. You could start seeing an uptick in orders from farflung destinations, or for items that are outside a customer’s typical shopping profile.
If these are the kinds of indicators you usually use to identify suspicious orders, keep in mind that they may not apply in the same way during times of high traffic. For example, some stores make it a policy to manually investigate any order where the shipping and billing address don’t match before processing it. But during the holidays, do you really want to review every order someone’s sending to a relative in a different zip code? No way! It would bog down your team, not to mention annoying your legitimate customers who are waiting for their gifts to ship. Which brings us to...
Maintain a Customer-centric Approach
Recent findings from Javelin Strategy estimate that almost $118 billion of legitimate orders are incorrectly rejected each year by credit card companies and retailers who mistakenly flag them as fraud. And that doesn’t even take into account all of the orders that are delayed because the merchant is verifying the shopper’s identity.
[Tweet "Almost $118 billion of legitimate orders are incorrectly rejected each year."]
The consequences of misidentifying a good customer as a fraudster and blocking or delaying their order can have lasting and unexpected side effects. Not only do you lose that sale, but you risk losing future sales from that customer if they’re inconvenienced and irritated. And they could share their experience with friends and family, or with the public on social media, leaving a stain on your brand reputation.
While the prospect of a tidal wave of phony orders may make you want to batten down the hatches, make sure you’re still optimizing for approvals so you’re keeping your customers front and center. As a bonus, this approach will also benefit your sales figures! For example, you might be tempted to introduce extra security checks like Verified by Visa or MasterCard Secure Code, but those introduce another hoop for shoppers to jump through –– which could lower conversion and customer satisfaction.
Research firm eMarketer predicts that ecommerce sales will hit $79.4 billion this holiday season, an outlook which may sound both exciting and daunting. But, a bit of preparation can go a long way. You have enough to think about when getting ready for high-traffic times –– fraud shouldn’t be another headache.
[Tweet "Ecommerce sales will hit $79.4 billion this holiday season."]
Also, keep in mind that the sales cycle doesn’t end when the customer clicks “Buy.” Consider how your fraud prevention approach affects the customer experience, so that even as you’re keeping fraudsters out, you’re making it as easy as possible for your good customers to do exactly what they want: buy from your store.
Less Development. More Marketing.
Let us future-proof your backend. You focus on building your brand.