According to a recent report published by Juniper Research, eCommerce businesses are on track to lose over $20 billion to fraudsters in 2021, a nearly 18% jump from last year.¹
As a result, retailers need to take extra precautions if they want to avoid becoming the victim of a major data breach or financial loss. In this post, we’ll dig into three eCommerce fraud trends that are on the rise in 2021 and highlight fraud prevention trends you can adopt to protect your customers as peak season looms.
Account Takeover Fraud is Leading the Pack
We can all agree that coming up with a strong (and unique) password is hard – especially when you have dozens and dozens of accounts with different retailers, email providers, and apps.
But not having a solid password is a far bigger headache, as you unwittingly expose yourself to fraudsters. In fact, a recent study found that over 22% of U.S. consumers (i.e. 24 million households) have been the victims of account takeover, where malicious fraudsters hacked into their insecure accounts.² And, as of late, the number of account takeovers has risen by 72%.³
How do retailers and eCommerce brands help consumers protect themselves from account takeover fraud without creating too much friction in the customer experience, though?
There are two ways. One is to incorporate dual authentication measures to ensure that the person accessing the account is the customer who owns it. This can be done by sending a code via text, email, or phone call or simply by asking for the answer to a security question.
However, option two is arguably the best choice for retailers looking to remove friction points from the customer experience. Here, retailers can use biometric “passwords” – like iris, fingerprint, or facial recognition scans – instead of keyed passwords to guarantee the authenticity of the customer.
Given that these “passwords” can’t be replicated by fraudsters, and they only require a single entry, biometrics offers a faster and more secure way to give customers access to their accounts. It’s also well-suited to mobile shopping experiences.
Bots Are Getting Smarter
In the past, bots were much easier to spot and stop. They could only automate repetitive tasks (like clicks and data entry), and they were unable to perform complex operations that required critical thinking like CAPTCHA requests.
But that’s changing. According to a 2020 report by DataVisor, 2% of fake accounts have been set up by a bot that solved the CAPTCHA request.⁴ And as time goes on, these intelligent algorithms will only get better at solving complex authentication puzzles.
This puts retail businesses in a pretty tough spot, as getting ahead of bots requires speed and accuracy that human employees simply don’t have.
Fortunately, you can solve this problem by adopting machine learning fraud detection like Radial’s full-service Payment, Tax, and Fraud solution. By layering machine learning on top of consortium data and human analysis, Radial enables your team to spot bots and fraudsters before they get ahead of you.
And since we offer a zero fraud liability guarantee, you never have to worry about the fallout of any fraudulent attacks on your system. You and your customers are protected on all sides.
Customer Experience and Fraud Prevention Are at Odds
Legitimate customers don’t want to deal with fraud, but they also don’t want to deal with arduous fraud prevention tactics – especially at checkout. If they’re falsely declined, they’re much more likely to abandon their cart and take their business elsewhere.
Retailers don’t have to choose fraud prevention over the customer experience (CX) to keep out fraudsters, though. In fact, many fraud prevention solutions can actually operate seamlessly (almost invisibly) in the background. And because these “invisible” solutions are much less likely to turn legitimate customers away, you also don’t have to risk your customer loyalty to ramp up security. The CX and fraud prevention and can work together in concert.
With your reputation, financial health, and customer well-being on the line, you can’t afford to have fraudsters running rampant on your eCommerce website or in your store. Luckily, there are quite a few fraud management trends you can take advantage of to mitigate the risk.
For the foreseeable future, that means creating strong dual authentication and biometric passwords, using machine learning to detect fraudsters early, and making your fraud prevention methods invisible to the customer.
Want to see how Radial’s Payment, Tax, and Fraud solution can respond to trends in payment fraud? Chat with our team today!
¹ “Online Payment Fraud: Emerging Threats, Segment Analysis & Market Forecasts 2021-2025,” Juniper Research, April 2021
² “Account Takeover 2021 Annual Report: Prevalence, Awareness and Prevention,” Security.org, February 2021
³ “Fraud Trends to Watch in 2021,” Lexis Nexis, February 2021
⁴ “Digital Fraud Trends Report 2021,” Datavisor, February 2021