It’s no secret that the pandemic has been a boon to eCommerce.
In June, 2020, online sales in the U.S. were up 76% compared to the same period in 20191. And, for the first seven months of 2020, those sales are up 55% year over year, accounting for over $434 billion in online spending. Predictions are that U.S. retail eCommerce sales will jump from $466 million in 2017 to $740 million in 20232.
Across the world, the situation is the same. eCommerce sales worldwide grew over 27%3. In the UK alone, online sales jumped 46%4.
These trends will not end with the pandemic, as consumers have learned to appreciate the convenience and money-saving aspects of shopping online.
Macy’s, heavily dependent on physical stores, saw its sales drop a whopping 29% last year to $17 billion. But it expects its growing eCommerce sales alone to skyrocket to $10 billion by 20245.
That growth in digital commerce has translated to growth in online fraud. Hackers and thieves are seeing rich pickings with the uptick in eCommerce, as buying online is no longer the domain of tech-savvy consumers; rather, it’s became the norm for of all walks of life, regions, and shopping habits.
New payment schemes, such as peer-to-peer apps, touchless commerce, and digital wallets are creating new ways to cheat. Consumers are also taking advantage of inappropriate chargebacks, asking their credit card companies for a refund rather than going directly to the merchant.
A recent study found that refund abuse fraud has increased by 51%, with similar jumps seen from promo abuse and account takeovers. Online payment fraud saw close to a 40% increase as well. Even simple, everyday acts, when abused, can be very costly. For example, a returned item can cost a merchant as much as 60% of its original sales price6. To avoid shipping costs, merchants often allow consumers to keep certain items and still get a refund, a tactic ripe for abuse by devious shoppers.
Not only are new payment methods increasing the importance of fraud detection and prevention, but simply the sheer volume of eCommerce has made fraud prevention a front-and-center topic. Even with fraud volume at a steady pace, when your online sales triple, your losses will also.
The good news is that as fraud losses mount up, corporate leaders are becoming more conscious of their detrimental effects. Fraud protection was once a concern solely of the IT department; others were worried that to emphasize fraud protection was to put the notion of a company’s losses in the forefront, thereby cutting the trust of its customers and depressing sales.
Fortunately, that’s now changed. eCommerce fraud protection is generally perceived as a net positive, and it’s become part of the agenda of many C-suite executives.
However, believing in the value of fraud protection and successfully implementing a program are not the same. While the job of fraud protection has been elevated in the eyes of many, there is a considerable lack of available talent. As of May, 2020 there were 171,000 openings for security personnel, but only 125,000 slots were actually filled, creating a 46,000 person shortfall. Typically, cybersecurity roles take 21% longer to fill than other IT jobs7.
Not only is eCommerce fraud protection a 24/7 job, but it’s one that can only succeed with the work of highly-skilled individuals.
Attempting to implement your own successful fraud protection can become a fool’s errand, as you become enmeshed in the taxing jobs of procurement, hiring, supervision, and data analysis. Rather, the best route is to work with a skilled, successful third-party entity that offers these services – a company that stays abreast of all new fraud tactics, has an enviable track record of success, and leaves you free to run the outward-facing aspects of your business that only you can do best.
To learn more about Fiserv’s suite of fraud management tools, contact us today.