The Growing Cost of Online Fraudfwsecure
As online shopping continues to increase, so does the threat of online theft. And now that secure EMV chip cards are active at retail locations in the US, fraudsters have shifted their focus more than ever to online stores.
Online Fraud Costs
Online fraud is responsible for billions of dollars of losses annually, causing merchants to not only lose merchandise, but the cost to prepare and ship that merchandise as well. Those figures are not even including the cost to prevent fraud in the first place, as online merchants must keep up with the latest fraud techniques and ways to detect and prevent them.
Yes, friendly fraud. Customers now find it easier than ever to reverse legitimate transactions. Originally, chargebacks were designed to protect customers from scams, however, recently customers have begun using it in place of refunds. “The customer is always right” extends to credit card issuers as well, who pass the loss to retailers when making a decision on a dispute.
Unfortunately, only about 86% of chargebacks are actually fraudulent. With “friendly fraud”, customers receive an item and dispute it, getting a full refund while also being able to keep the item. Whether or not a chargeback claim is in the retailer’s favor, the retailer is charged a fee—and if a retailer gets too many chargebacks, their processing account can be terminated!
The Real Cost of Fraud
In recent years, internal fraud departments are playing a more central role in eCommerce operations. There are many 3rd party solutions that provide a fraud score on each order, and the store’s internal fraud team uses that score to make a judgement on each order. Ultimately, a fraud department prefers to err on the side of caution, and they reject many orders that are actually legitimate. This is even more common on international orders which are even more suspect. Furthermore, when a website receives an influx of orders during sales and peak seasons, it comes with an increase of fraud, and many more legitimate orders are rejected under pressure. The real cost of fraud is no longer losses from chargebacks, but rather the loss of sales from rejecting legitimate orders. And when you reject a legitimate order, you are also potentially rejecting a customer for life (would you continue shopping at a store that rejected your order and said it was fraud?).
Eliminating Online Fraud Risks
FraudWatch not only screens 100% of sales for you, but we guarantee to cover any chargebacks or fees on orders we approve. With each order, you will receive a simple Yes/No response. If you receive a Yes, you can ship that order without any risk. More importantly, our approval ratio is the highest in the industry, which means that we will approve more orders than manual reviews your internal fraud team will conduct, at a far less cost.
Retail ecommerce can now be completely protected from fraud, from online orders originating in any part of the world, and even orders placed over the phone or from mobile devices. FraudWatch gives retailers the peace of mind of never losing a legitimate sale, while offering cost-effective solutions to bolster revenue.