After years of being touted by the retail industry, consumers have now caught up to and embraced the benefits of eCommerce. As pandemic-motivated social distancing has become the norm, eCommerce transactions, including in-app, QR code, and online purchases, have seen their sales increase as shop from home, home delivery, and curbside pickup have been embraced worldwide.
There’s no doubt that many eCommerce merchants that have successfully adopted these new payment strategies have benefited from this change in consumer behavior. Unfortunately, the growth in revenue from eCommerce transactions has also brought along with it a growth in online fraud, as unscrupulous individuals see a potential path to make an easy buck.
Some fraud, of course, may be motivated by those economically desperate, looking for a way to make ends meet while living on limited funds. But just as likely is it that much of the increase in fraud is being perpetrated by unscrupulous individuals always looking to pull off another scam.
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Retail fraud comes in many guises, from the use of stolen credit cards, to fraudulent claims of receiving damaged or no goods, to the misuse use of online discount codes. Whatever the type, retail fraud has continued to grow; a recent survey found that 39 percent of those merchants questioned experienced an increase in online payment fraud while 51 percent saw growth in phony online refund claims.
As we continue in to 2021, we expect that retail fraud will only increase. Some will demand refunds for supposedly unshipped goods, or claim that others have unknowingly used their credit cards. And clever hackers will increasingly find ways to improperly use and reuse one time online promo codes, cutting into merchant profits and revenues.
Of course, there are already fraud-protection strategies in place. The EMV® chip standard helps ensure that theft of credit card information at the point of sale will be useless. And the 3-D Secure authentication requires cardholders making online charges to provide additional, personal information before the charge is authorized.
The latest 3-D Secure standard, 3DS2, demands that when using a credit card in a CNP situation, the cardholder must provide, in addition to the primary account number, either something the cardholder has (such as data from one’s device), something he or she knows (such as a bank login), or something one is (such as biometrics), to confirm legitimacy.
Yet the implementation of 3DS2 can still present problems for the merchant. Demanding proof with every transaction can drive away customers; ad blockers that prevent authorization will also frustrate consumers, who may decide to take their business elsewhere.
To minimize fraud, it’s important to work with a company that can provide the latest, most sophisticated fraud identification technologies in addition to EMV and 3-D Secure. That includes the ability to set up dynamic fraud rules, as well as the implementation of sophisticated AI technologies that can track a cardholder’s usage history and patterns, and flag suspected transactions.
And once fraud is detected, real-time, end-to-end incident management and investigative support is key to maintaining excellent consumer relations, helping your business to be among those that is trusted and grows, even in this most difficult of times.
To learn more about Fiserv’s suite of fraud management tools, contact us today.