The pandemic, which has wreaked havoc around the world in many ways, has also boosted ecommerce as a safer option for purchases. In March, retail sectors saw on average a 74% increase in ecommerce transactions globally compared to the same period last year.
However, as shipment delays became an ongoing issue, consumers increasingly turned to buy online, pickup in store (BOPIS) for faster delivery and to avoid shipping charges. Fraudsters have also found this method to be convenient, taking advantage of the short window between purchase and collection and avoiding chip and PIN or signature verification as BOPIS fraud rates have continued to increase year over year.
Now, as consumers have begun holiday shopping earlier than ever, merchants are expecting historical peak trends, and fraudsters will try to take advantage of this. To prepare for the uptick in BOPIS fraud this holiday season, you must consider enacting both short-term and long-term fraud mitigation strategies to protect yourself and your customers while still providing frictionless purchasing experiences.
Positive Profiling
Because BOPIS is a card-not-present channel, fraudsters tend to take advantage by using stolen card information. Therefore, you need to scrutinize each transaction while ensuring genuine customers can complete a purchase without any friction.
With global consortium data, merchants can identify fraud by better understanding customer behavior across all channels and increase conversion. As a result of the increase in ecommerce transactions due to COVD-19, 64% of first-time BOPIS customers had prior shopping history with that merchant. Knowing your customers across all channels is necessary for a fast and frictionless ecommerce experience.
Authentication
By intervening at the time of purchase and at the point of collection, you can help customers enjoy the benefits of BOPIS and thwart fraudsters. One way to do this is by enabling chip-and-PIN authorization in store.
In addition, notifying store associates about an approved order and training them to verify a customer’s ID along with the credit card used to make the purchase (as well as building in a delay between order and pickup) can go a long way toward blocking fraudsters.
3D Secure Using Risk-Based Authentication
3D Secure is technology that allows buyers to enter a digital signature or PIN at checkout – a concept that is not that far from chip-and-PIN in a card-present scenario. This provides the user with a comfort level that only they can make online purchases through BOPIS using their card.
In addition, you gain a comfort level knowing that the person using the card is its rightful owner. It was introduced first by Visa, known as Verified by Visa, and quickly followed by Mastercard with SecureCode. Other schemes followed, and we also have solutions offered by the likes of JCB International (J/Secure) and American Express (SafeKey).
Bonus Tip
Fraudsters use many different tricks to try to take advantage of BOPIS. For example, “splitting the cart” involves placing an order for goods to be physically shipped to a genuine customer’s home, mixed in with BOPIS items. The items delivered to home provides legitimacy to the purchase as they resemble previous orders from that customer. However, the additional BOPIS items can be picked up by the fraudster and either kept or sold for profit.
Using known customer data and machine learning to scrutinize the transaction helps you determine the risk. For example, if the purchase was made from a different device or IP address than usual, it could indicate fraud.
From grocery delivery preferences to payment methods, consumer behavior has shifted dramatically as a result of the pandemic, and many won’t be going back to the way things were. Electronic payments and digital payment services have become a way of life beyond the restrictions of the pandemic.
Merchants must adapt to this shift by meeting the demand for flexible journeys and enabling customers to interact easily across channels for both purchases and returns. At the same time, find ways to protect yourself and them against BOPIS fraud without putting the customer experience at risk.
Erika Dietrich is Vice President of Global Risk Services at ACI Worldwide