E-commerce Fraud Trends You Needto Know

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As you’re reading this, fraudsters are hard at work thinking of new ways in. Such is the reality that e-commerce retailers need to accept and resolve.

As explained by Shopify Plus’ former editor-in-chief, Aaron Orendorff: “‘Business as usual’ is no more: in retail and in e-commerce. It’s not the location that matters. Nor futuristic jargon. Leaders are facing a world of opportunity to evolve or perish, with success coming from big and small steps alike.”

Evolve or perish

Likewise, merchants should pay attention to fraud-specific trends. The reality is that fraudsters will always find a way to steal. In 2018, e-commerce fraud cost merchants $4.13 billion globally. According to Jim Gee, Head of Forensic & Counter Fraud at Crowe Clark Whitehill:

“The threat of fraud is becoming increasingly like a clinical virus—it is ever-present and ever-evolving. The bad news is that digitalization of information storage, and process complexity, coupled with the pace of business change, have created an environment where fraud has thrived, grown and continued to mutate.”

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Here are 4 important trends you need to know:

Alternative payment methods on the rise

1

This year, approximately 96 million mobile phone users will have P2P apps installed on their devices:

Zelle, Venmo, and Square Cash will emerge as the top 3 P2P payment providers this year. What does this mean for your business?

It means that you need to consider revamping your store to begin accepting payments from these increasingly popular mobile payment apps. The fact that big brands such as Forever 21, J. Crew and Urban Outfitters have started accepting Venmo payments should be a sign that this is a game-changing trend you need to prepare for.

How many mobile phone p2p payment users are there in the US?

Millions and % of mobile phone users

64.4M

82.5M

96.0M

27.9%

35.1%

40.4%

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203

We’re talking about both legitimate CNP fraud chargebacks and friendly fraud chargebacks which are currently costing ecommerce merchants $80 billion annually.

A lot has been said about it, but it’s only recently that merchants have started paying more attention to “friendly fraud.” Unfortunately, friendly fraud is still going to be a problem among retailers this year, along with another ecommerce scam—referral abuse.

If you’re not familiar with referral abuse, it’s not a concept that is difficult to understand. Essentially, if you’re offering credits or coupons to your customers who can refer others to your store, you’re vulnerable to this scam. A number of customers have been proven to create fake accounts to qualify for the offer. If the promo requires a purchase, these customers will place an order but cancel or return it upon receiving.

2019 is the year for merchants to take a more vigilant stand against friendly fraud and referral abuse.

Chargebacks continue to cause headaches

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3

Omnichannel shopping is nothing new. Yet, very few merchants have been able to really deliver.

“Why focus on omnichannel retail? Today’s consumers are channel blind, seeking out great retail experiences regardless of the touchpoint. Furthermore, retailers that persist with fragmented omnichannel strategies that ultimately don’t give consumers the single, perfect experiences they crave will be left in the dust,” says Melissa Campaneli of leading e-commerce publication TotalRetail, which also releases the annual Top 100 Omnichannel Retailers Report.

This year, one e-commerce trend that has emerged is the consolidation of the fragmented pieces Campaneli is talking about is regarding automation, more specifically, in terms of inventory management and fulfillment. Automation tools allow merchants to consolidate inventory numbers across all channels and alert respective personnel if the stock for a particular product is low or zero. For example, these automation tools can trigger a prompt to your social media marketing team to stop promoting low-stock/out of stock products.

If you’re currently offering omnichannel shopping options to your customers, consider incorporating automation into your strategy.

Improved omnichannel shoppingexperience with automation

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It feels like the world is just waiting for the next big data breach. In 2018, the ten biggest data breaches affected more than 2.43 billion people worldwide.

Massive data breaches leading to increasing ATO attacks

This rise in the number of data breaches is paving the way for ATO e-commerce fraud to also increase. The number of ATO fraud incidents has seen an increase, with 44% of organizations experiencing a successful ATO-based attack.

Source

1 Aadhaar Breach

People Affected Disclosed

January 2018

September 2018

June 2018

February 2018

December 2018

June 2018

September 2018

November 2018

September 2018

April 2018

1,000,000,000

500,000,000

340,000,000

150,000,000

100,000,000

92,000,000

87,000,000

82,000,000

50,000,000

37,000,000

Starwood-Marriot Breach

Exactis Breach

Under Armour-MyfitnessPal Breach

Quora Breach

MyHeritage Breach

Facebook Breach

Elasticsearch Breach

Newegg Breach

Panera Breach

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10

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Get in TouchFind out How

Keep pace with the bad guys with Vesta

While big fraud cases can send chills down the spine of any merchant, it’s not just a gloom-and-doom scenario. There are things that you can do, including staying up to date with the latest fraud tactics and the best practices for preventing them. This due diligence, coupled with a strategic approach to security, and the right technology, forms a potent weapon for merchants to fight back and retain their competitive advantage in this ever-changing industry.

Merchants are not helpless

Vesta Corporation is a pioneer in processing fully guaranteed Card Not Present (CNP) payment transactions for ecommerce merchants. We offer scalable protection payment solutions and patented fraud protection services. We focus on protecting your revenue from chargebacks and fraud so you can focus on your company’s strategic growth.

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