It wasn’t so long ago that large, global corporations were the primary targets of fraudsters. In turn, these organizations got to work, investing in full-featured detection and prevention technologies.
That’s right. Those forward-thinking small to medium businesses (SMBs) who have established an e-commerce presence to meet demand over the past few years are today facing ever-increasing risk. In fact, global e-commerce fraud loss is expected to reach $48B by the end of 2023, with North American merchants bearing the brunt, expected to account for 42% of the total loss.
Common types of e-commerce fraud
- Account takeover (ATO)
ATO fraud happens when a hacker illegally accesses a site using stolen credentials. Quantifying the cost to merchants is difficult considering the costs associated with customer service operations, lost customer lifetime value and the impact on brand reputation.
- Synthetic identity theft
With synthetic identity theft, the identity isn’t stolen per se, it is created by a fraudster using legitimate personal data. The Federal Reserve cites synthetic identity fraud as the fastest-growing financial crime in the US, accounting for nearly 80% of all identity fraud.
- Chargeback fraud and abuse
Also known as first-party fraud or friendly fraud, is when a cardholder identifies a purchase on their transaction statement as fraudulent and disputes it sparking the chargeback process. In actuality, though, they or someone else in their household may have made the purchase.
- Promotion abuse
Promotion abuse refers to the fraudulent use or receipt of sign-up incentives. Referral bonuses and loyalty discounts are common types of promotion fraud.
What’s a merchant to do?
It’s clear that fraudsters won’t go gentle into the night.
It is important to have a multi-layered fraud prevention strategy. Merchants who take the appropriate steps to integrate security solutions that do not negatively impact their consumers come out on top. The first step, of course, is choosing the right fraud prevention tool.
With a data-driven approach, we have made it our business to understand what merchants need and how to stay in front of current and emerging e-commerce fraud.
By keeping your customer’s experience front of mind, we streamline onboarding and transactions for good users, improving conversion rates and encouraging customer loyalty. And we are with you every step of the way.
