Four Tips To Prevent The Ever-Increasing Online Retail Fraud
The retail landscape is susceptible to seismic changes because of the ever-changing consumer behavior trends. The opportunity for growth and expansion rests on adequately capturing these trends and delivering marketing strategies along these lines. Since most customers are now shifting online to make purchases conveniently and shop from a plethora of options that offer the best incentives on the digital forefront, retailers need to appropriately leverage their business platform and bring changes in the marketing and sales cycle. Besides the physical stores, integrating e-Commerce platforms has become critical to improve brand visibility and deliver better to customers.
However, the changing business model is exposing retail companies and customers to a greater risk of fraud. Fraud is a pressing challenge for retail stores, and it can eat through their finances, and affect customer loyalty and brand value. Fraud attempts are growing in both digital and offline stores. To counter the threat of shoplifting in the stores, the State of Michigan has deployed penalties based on the degrees of retail fraud. The most common is retail fraud 3rd degree which is charged to a person with no prior criminal record if they attempt to steal any merchandise under $200. These regulatory practices help to keep the fraud attempts under check.
Retail fraud in e-Commerce platforms is witnessing phenomenal growth. Since the digital store needs to incorporate several third-party touch-points like vendors/ suppliers, transporters, distributors, or other third-party service providers, it is increasing the risk of collusive frauds which one cannot detect easily. Various sophisticated frauds have become pervasive in e-Commerce stores. Some of the most common fraud types of payment fraud or identity theft, friendly fraud, clean fraud, affiliate fraud, and triangulation fraud. Hence, to safeguard the digital retail stores, companies must adopt robust monitoring solutions, and fraud prevention tools to make their platform safe for conducting e-commerce transactions. Here are few ways merchants can better prepare themselves against online retail fraud and prevent it altogether.
Use AI/ML Model
Artificial intelligence is redefining the future of fraud prevention. It is proving to be very effective in battling e-Commerce fraud. The complexity of payments fraud-based attacks is increasing, and these often have a completely different digital footprint or pattern which makes it difficult for stakeholders to effectively trace it. AI is enabling companies to counter this challenge, and it is bringing scale and speed in fighting against payments fraud. Since real-time transaction requires real-time security, AI is helping e-businesses to stay on top of their security solutions and can trace fraud patterns by leveraging historical data across various touchpoints to deliver a reliable fraud score. It can find anomalies in large-scale data sets in seconds and create an integrated picture of customer behavior to identify who is most likely to commit fraud. You can train AI/ML model to quickly learn and act on threats so that you can make your digital retail store more reliable. Based on the actionable insights, you can appropriately decide if you should accept or reject the payment, and eliminate possible risks. With AI, it has become possible to thwart various nuanced abuse attacks such as refer a friend abuse, promotion abuse, or seller collusion. You can exercise better control over chargeback rates, decline rates, and operational costs to achieve your business objectives. Moreover, it enables you to stay aligned with various internal business policies to keep your business in compliance and thrive in the marketplace.
Use Address Verification Service (AVS)
The use of Address Verification Service (AVS) can help to effectively limit fraud and charge-backs. It helps to verify if the customer’s billing address which is available with the merchant is similar to the one associated with the cardholder’s credit card account. Depending on if both the data match fully, partially, or not at all, merchants can take their decision to process or cancel the order. AVS is a widely used fraud prevention tool used in card-not-present (CNP) environments.
3D Secure
3-D Secure, or 3-domain structure, can help you prevent online fraud that is associated with credit and debit card transactions. It requires customers to complete an additional verification step with the card issuer when paying, hence it is also known as payer authentication. It helps to stop card details from being stolen and used online.
Monitor Customer Shopping Behavior
As the popularity of online shopping is growing, so is the opportunity for cybercriminals to defraud online businesses. While adopting tools and software can help companies prevent fraud to a great extent, some of these frauds are elusive and can negatively impact your brand identity. You need to educate your team to keep a vigilant eye at all times and train them in best practices to develop a proactive approach to prevent online fraud. It is important to monitor customer activities across various touchpoints and look for various signs like placing multiple orders in quick succession, use of multiple shipping addresses, and other anomalies in purchasing behavior. A proactive behavioral analysis can help to efficiently combat online fraud.
To Conclude:
These are a few effective ways companies can detect both high and low-risk frauds and prevent them ahead of time. It will enable them to sustain their services better amidst intense competition, comply with regulatory protocols, and actively prevent sophisticated fraud attempts.