Beginning in March 2020, rather than driving to the grocery store, families loaded up their online carts with bananas and bagels, and waited for delivery. Instead of heading to their favorite big box outdoor retailer, those in search of backyard relaxation hopped online and ordered the best hammock they could find.
As people hunkered down, following shelter-in-place guidelines—and brick-and-mortar stores shuttered their physical locations—online retailers saw an unprecedented boom in sales and activity. As reported in Forter’s 2020 Fraud Attack Index, food delivery and beverage sales volumes increased 93%, while home furnishing and garden consumer transactions increased 172%. Not to mention a 55% increase in buy online, pick up in store transactions.
While growth is good, it also allows fraud to seep through. More than ever, merchants need to assess their ecommerce fraud detection and fraud prevention strategies.
More Shoppers, More Challenges
By the end of June 2020, it wasn’t only extraordinary numbers of existing online shoppers, it was also never-before-seen numbers of new online shoppers springing up.
According to the Forter’s 2020 Fraud Attack Index, the number of new users on merchant sites was up by five times. New users accounted for approximately 30% of overall consumer volumes, versus 5-to-7% during pre-COVID-19 days.
While new customers present a massive business opportunity, they also pose risk. Existing fraud prevention systems are often unable to accurately identify legitimate new users, so those same new customers are declined at a rate 5-7 times higher than returning users.
Plus, let’s say a new customer is falsely declined while buying her favorite lipstick at her go-to make-up store, she’s 40% less likely to ever return to that merchant’s site. Not only does that mean lost revenue of a one-time purchase, it’s the loss of a potential lifetime value of the customer.
Customer Loyalty Starts Now
Think about it: a merchant not only loses a potential new sale, it also misses out on the customer’s lifetime value, saying good-bye to the opportunity to turn a one-time shopper into a loyal, returning customer.
So how do companies separate legitimate first-time customers from ecommerce fraud (including return abuse, chargeback fraud, and credit card fraud) during the checkout process? How do businesses eliminate false declines of prospective new customers? And how do retailers make up for the revenue lost on return fraud and chargeback fraud?
In A Word: Preparation
In three words: ecommerce fraud protection.
Forter’s fraud prevention platform prepares online merchants for the influx of first-time online shoppers using a global network of data consisting of other retailers, banking institutions, and payment providers across geographies. This network of trust works together mastering fraud detection, including return abuse and chargeback fraud, distinguishing legitimate customers from fraudsters.
A Powerful Fraud Detection Platform
Here’s how it works: at checkout, a first-time customer is instantly put through a rigorous, real-time shopping identity check. Rather than declining that new customer on their first purchase, Forter’s solution instantly leverages its global network of data for signals that would identify the shopper as a true customer versus an online fraudster. If the potential customer has shopped and been approved at another merchant’s site within the Forter network, our technology can then make an accurate approval decision—instant fraud prevention at its finest.
Retailers that tackle ecommerce fraud prevention alone simply don’t have the edge. Forter’s global network lets merchants eliminate the worry and guesswork that come from decisioning legitimate customers, and ecommerce fraud in general.
Merchants are then free to focus on what counts: creating stellar customer experiences and building loyal, lifetime customers. Not to mention, growing their business without leaving money on the table.
Want to stay current on fraud prevention? Download Forter’s 2020 Fraud Attack Index now.
