Multiple Customer Touchpoints Create More Opportunities for Fraudsters 

From the moment a customer visits a merchant’s website, to when they redeem loyalty points online or enter a coupon code, their shopping journey is vulnerable to new methods of exploitation. In fact, according to a recent report from Forter and the Merchant Risk Council, fraud attack rates increased 13% between Q1 2017 and Q1 2018, resulting in billions of dollars of lost profits for e-commerce merchants. Therefore, it is essential that retailers are protected at all stages of the customer journey beyond the point of checkout.

This can be accomplished by focusing on the entire customer experience (as opposed to just monitoring for fraudulent transactions) and by understanding the holistic relationship between the merchant and the individual. For example, by enhancing visibility into the end-to-end customer journey (i.e.  account logins, coupon abuse,  loyalty program redemption, return fraud, and even suspicious customer service interactions), enterprise fraud management (EFM) solution providers can use a combination of behavioral analysis, machine learning, and ongoing analyst research to ensure that fraudulent actions are instantly identified in a fraction of a second.

Selecting Your Fraud Risk Tolerance 

A conservative fraud model often identifies fraudsters, but it can also adversely impact the customer experience by being overly cautious and accidentally rejecting orders from legitimate customers. This can happen simply due to the change in a variable such as accessing an account from a new device, or shipping a mobile order to a different location. These “false positives” often alienate good shoppers, leaving money on the table.

More antiquated fraud prevention services rely on imprecise and incredibly labor-intensive manual reviews to authenticate suspicious transactions. In an era of increased consumer expectations for fast, personalized service delivery, such delays are unacceptable. They create friction for shoppers and limit the volume of transactions an e-commerce retailer can process at any given time.

There are multiple ways EFM solutions that use a manual review process can negatively impact the customer experience, including:

• Order uncertainty – if a higher number of orders are sent to review, a greater share of the customer base will face uncertainty in order completion. This is not a good customer experience, particularly for verticals such as travel, where immediate confirmations of purchase are essential.
• Canceled orders – cancelation of genuine orders due to the pre-existing biases or shortcomings of manual reviewers can significantly lower customer satisfaction levels. In many cases, retailers and merchants have failed to inform the customers in a timely manner that their orders have been canceled.
• Mishandling disputed orders and chargebacks – returns for genuine purchases, wrongly classified as fraud can lead to inefficient or erroneous handling of product returns. It is crucial to handle disputes correctly in order to maximize customer lifetime value.
• Order delays – taking too long to complete fraud checks for store pickup orders can lead to unsatisfactory delays and turn into a competitive disadvantage for retailers. This can be especially challenging for businesses during busy periods where more transactions must be processed in a shorter time period.

EFM solutions must assist retailers and merchants in delivering a friction-free shopping experience while simultaneously protecting them. Well-designed EFM solutions can help retailers improve customer experience by enabling immediate and smooth commerce. For example, AI-based EFM tools can be used to deliver faster and easier checkout experiences for pre-approved customers deemed lower risk.

Vendor Highlight – Forter

Forter is a leading provider of fully automated end-to-end e-commerce fraud prevention. The company protects merchants during each stage of the customer lifecycle with real-time notifications of fraud instances, ensuring merchants can scale efficiently and securely without jeopardizing the customer experience. Key highlights of Forter’s EFM solution include:

• The ability to leverage thousands of unique data points and machine learning algorithms to deliver a highly customized fraud solution for each merchant
• The ability to instantly stop fraud and abuse at every user touchpoint pre- and post-transaction
• Fully automated, instant fraud detection that completely eliminates the need for manual reviews and can operate at any scale
• 100% chargeback guarantee
• Dedicated focus on mobile commerce versus treating mobile as a subset of e-commerce
• Proven ability to help merchants improve their customer experience by eliminating friction during the checkout process – thus helping to improve conversion rates for customers

Wrap Up

The acceleration of stolen identity data has further strengthened the need for EFM solutions that enable retailers and merchants to generate holistic visibility into all customer touchpoints. By focusing on the individual behind the transaction, and by ascertaining whether the observed behavior of an individual is indicative of a genuine transaction, Forter can deliver optimum fraud prevention at scale for e-commerce.