It’s hard to believe that Black Friday and Cyber Monday are less than a week away. For all you digital shoppers, I recently worked with Yarbena Arar at Macworld to provide some online safety and security tips we as consumers need to remember to follow to prevent becoming a victim of fraud.
Looking at fraud prevention with a set of business eyes, a recent study calculated the average “true cost” of fraud for merchants to be 3.1 x the amount of the actual fraud. This multiplier factors in additional costs such as chargeback fees and the cost of replacing stolen goods. Of course depending on your industry, this multiplier could be higher or lower, but using the average, a $100 in actual fraud equates to a total loss of $310.
So how should merchants keep losses from soaring when volume picks up next week? I caught up with our friends at GSI Commerce, a leading provider of e-commerce and interactive marketing services for the world’s premier brands and retailers, who had a few tips to share:
The first step to reduce the impact on your manual review queue is to look at historical transactions to identify fraud rules or strategies with a high false positive rate. You want to focus on transactions that are consistently approved and processed for shipment.
Another best practice in managing the increase in volume is to identify repeat business. Someone that shopped with you 6 months ago and has not charged you back is unlikely to pose significant risk. Building a valued customer database and applying positive rules to it not only helps you lower your review queue workload, it also rewards loyal customers by ensuring faster processing times.
Of course once a merchant has reduced their manual review rates, they are more vulnerable for fraud attacks. It’s important to develop a standardized way of monitoring transactions that are automatically processed. You should look for data patterns that are repeatedly occurring at a macro level. This allows you to stop an attack in progress and plug the hole before it gets worse.
While you want to protect your business from fraud, remember that customer satisfaction is just as important to ensuring your businesses success. Here are some other tips both GSI and IDology recommend to help prevent fraud and drive customer satisfaction: