Ecommerce brings many opportunities to quickly reach more customers nationwide and across the globe. It also brings risks that include domestic and international fraud. In the U.S., online fraud rose 39% between January 2016 and June 2016 according to the October 2016 Global Fraud Attack Index. The risk is greater for global ecommerce. According to LexisNexis’ 2016 True Cost of Fraud study, international ecommerce fraud happens 2.5 times more frequently than domestic ecommerce fraud.
Many retailers are successfully conducting ecommerce across borders and expanding into new markets. Others are just starting to evaluate international ecommerce. No matter the experience level or extent of your business’s reach, a fraud protection program is essential. Here are 4 tips that can help you substantially reduce your global ecommerce fraud risk.
The Social Media Factor
Have you ever proceeded to check out on a retailer’s site and received the option to create an account with your social media login? Creating an account using social media information is a convenient option for consumers. For retailers, it offers an enhanced level of security.
Social logins can verify consumers’ identities. According to Worldpay’s Fraud Trends 2016, 56% of merchants place greater trust in customers who use social media logins and 35% already use social media as part of their customer login process. According to the Worldpay report, the main reason merchants use social media for fraud prevention is to check that an account and an individual’s identify are real. Although this process is manual and time consuming, it provides retailers with information about their customers and reassurance the sales are valid.
The Mobile Factor
The UPS Pulse of the Online Shopper™ study revealed that 44% of U.S. consumers made a purchase on a smartphone in 2016 – up from 30% in 2015. As more consumers shop on mobile devices, retailers are increasingly concerned about the risks of m-commerce fraud. According to the Worldpay report, 59% of merchants believe there is a greater risk for fraud when shopping on a mobile device. This may be due to the lack of firewalls and virus protection software on mobile devices that are normally found on desktop and laptop computers. Consumers are also at increased risk of downloading compromising mobile apps that can allow fraudsters to access their personal information.
Despite these challenges, fraud protection tools and techniques for m-commerce are readily available. For example, geolocation services enable retailers to verify a consumer’s shipping and billing address match the IP address of the device used to place the order. A red flag can be raised if someone says they live in Florida yet the IP address shows they are in another country. Device identification is another way to help prevent ecommerce fraud. It gives devices a “fingerprint” and tracks the shopping activities performed with them. Once fraudsters are identified, their devices can be blocked from future transactions.
Use a Fraud Protection Team
Algorithms, social media and data touch points are essential tools to investigate fraud. Ultimately, these tools need to be leveraged by a team of dedicated fraud specialists who have expertise in detecting the evolving patterns of international ecommerce fraud. The Association of Certified Fraud Examiners (ACFE) and other organizations create a network of experts which share knowledge about fraud networks. In many cases these groups involve federal and international authorities to share knowledge about new fraud rings and strategies they employ. Leveraging this global communal knowledge is a critical factor to preventing international fraud.
Get a Fraud Protection Solution
In addition to social and mobile-specific fraud protection solutions, retailers should consider a broader set of protective measures for their international ecommerce sites. Online shopping sites should “look” for and reject fraudulent credit card requests as part of a comprehensive global ecommerce strategy. When technologies and expertise such as these aren’t used, the costs can be high.
Take luxury jewelry company Miansai as an example. After launching its international ecommerce business, Miansai experienced every retailer’s nightmare. Thousands of dollars in fraudulent international ecommerce orders took a toll on the business, causing challenges with the company’s banking relationships. For an enterprising jewelry company whose typical international order is 15-25% more than a domestic order, the stakes were especially high.
These issues, combined with high shipping costs and struggles providing an experience consistent with the company’s premium brand, motivated Miansai to outsource its global ecommerce operations. International fraud was eliminated virtually overnight. Miansai said this protected its business from fraudsters, boosting revenue and improving customer service.
The lesson from Miansai and others: Don’t let fraudsters get in the way of global ecommerce growth. The password for success: prevention.
Yursil Kidwai is Vice President of Ecommerce for UPS i-parcel