Ecommerce brands have a new headache to deal with on top of worries about sales and email open rates: payment fraud, according to a study by the American Express company Accertify.
Accertify surveyed 105 respondents at merchant companies in December 2020. It found that 38% saw an increase in online payment fraud last year.
In addition, 31% witnessed more refund/orders-not-received fraud, up from 25% in 2019. And 25% suffered from an increase in identity theft, but that rate is down one percentage point from the prior year.
In contrast, promotion fraud abuse fell to 22%, versus 25% in 2020.
All this points to a need for strong identity validation and better cleaning of email lists.
Fraudulent shoppers should be removed from the lists and prevented from further ordering, although that may difficult if they are using multiple or stolen identities. Analytics may also be of use in preventing fraud.
Of the many types of fraud, here are the ones they are most concerned about:
Online payment fraud — 54%
Refunds/orders not received — 35%
Identity theft — 30%
Gift card fraud — 26%
Promotion abuse (coupon) — 17%
Account opening/account creation fraud — 19%
Account takeovers — 9%
First-party fraud (e.g. friendly fraud) — 14%
Other — 1%
Just how are merchants dealing with the problem? Here are the strategies they are investing in this year:
Automated chargeback processing — 37%
Deploy pre-dispute products — 33%
Partner with a technology vendor — 32%
Add additional headcount — 25%
Ignore hard-to-win chargebacks and disputes — 20%
Ignore low-value chargebacks and disputes — 14%
None — 19%