How Credit Card Fraud Can Hurt Your Business
Posted: Sun Dec 22, 2024 5:03 am
Fraud prevention is beneficial to every business’ bottom line. But selecting and implementing the right strategy requires careful consideration and focused attention. If you were to ask a fraud analyst for their advice on credit card fraud prevention, how would they respond?
We asked two of ClearSale USA’s top fraud analysts what they wish businesses understood about credit card fraud, and their answers are below.
Don’t assume fraudsters can’t find and attack your business
Fraud prevention mistakes can make you an easy target for fraudsters. This is the biggest security mistake in e-commerce according to ClearSale fraud analysts: not having a fraud prevention solution in place.
For fraudsters, it’s their job to do what they do, so they look for easy opportunities to increase their criminal activity. When they find vulnerabilities, they use every tool in their arsenal to email list providers in germany advantage of them. Retailers can anticipate repeat attacks because fraudsters know that merchants will typically beef up their security soon after they’ve been compromised.
But that’s not the only way a business can suffer catastrophic fraud attacks. These analysts know that good news travels fast, but in the fraud world, good news for them is bad news for you. If fraudsters discover that your e-commerce business is vulnerable, word spreads and you’re under attack from all sides. By that point, it may be too late to stop the attack.
A good fraud prevention strategy can improve your bottom line.
Businesses manage a variety of costs, and fraud prevention is often seen as just another expensive expense. What e-commerce businesses need to understand, ClearSale analysts emphasize, is that the quality of a company’s fraud prevention strategy can have a huge impact on a retailer’s bottom line.
A comprehensive fraud protection strategy can help your business by:
• Protecting against chargebacks: With significant fines, not to mention the cost of merchandise and shipping, chargebacks can quickly eliminate profit margins.
• Increasing your order approval rate: A hybrid solution that combines human analysts with artificial intelligence provides a more complete data set and more effective fraud protection, giving you more confidence when approving orders.
• Minimizing fraud as a percentage of profit: This number has been growing steadily, reaching 47% in 2016. By preventing fraud, you’re not only protecting your business from this predictable expense, you’re also increasing customer trust and loyalty.
• Maximize resources and labor budget: There will always be an initial expense with an outsourced solution. But over time, this expense will typically prove to be less than maintaining an in-house protection team. An outsourced solution can also protect you from reputational damage and lost opportunities from sales that never happen.
Consider Several Factors Before Choosing a Fraud Protection Solution
To prevent large-scale attacks on their e-commerce business, smart business owners need to establish a concise plan that covers a variety of transaction types and situations. While businesses may initially evaluate fraud protection solutions based on the promise of reduced chargeback costs or the cost of outsourcing a fraud team, ClearSale analysts want you to know that there are other factors that are just as, if not more, important to consider:
• Ensure you have high-quality data at your disposal: One important factor that businesses often overlook is the quality of the information available for analysis by the fraud protection solution. Often, in the interest of improving the end-user experience, companies do not collect enough information from consumers during checkout.
As a result, little information reaches fraud analysts, which could skew the final decision and make it harder to determine whether or not a transaction is fraudulent.
• Measure transaction rejection rate: Analysts say this is perhaps the most important element when evaluating a fraud prevention strategy. While any anti-fraud strategy will work to block transactions and reduce chargebacks, the real question is: How many transactions are you declining? The best strategy is one that analyzes transactions in a cost-effective, time-efficient manner, easily identifying and flagging only suspicious orders.
You could be losing revenue if you’re rejecting more transactions than necessary, hence the importance of measuring your rejection rate.
• Distinguish legitimate from fraudulent customers: If your system can’t tell the difference between the two, you could be losing more than just revenue. You could be sacrificing loyal customers who are frustrated by declined transactions. By reducing the number of rejected legitimate transactions, you can increase your sales and profits.
We asked two of ClearSale USA’s top fraud analysts what they wish businesses understood about credit card fraud, and their answers are below.
Don’t assume fraudsters can’t find and attack your business
Fraud prevention mistakes can make you an easy target for fraudsters. This is the biggest security mistake in e-commerce according to ClearSale fraud analysts: not having a fraud prevention solution in place.
For fraudsters, it’s their job to do what they do, so they look for easy opportunities to increase their criminal activity. When they find vulnerabilities, they use every tool in their arsenal to email list providers in germany advantage of them. Retailers can anticipate repeat attacks because fraudsters know that merchants will typically beef up their security soon after they’ve been compromised.
But that’s not the only way a business can suffer catastrophic fraud attacks. These analysts know that good news travels fast, but in the fraud world, good news for them is bad news for you. If fraudsters discover that your e-commerce business is vulnerable, word spreads and you’re under attack from all sides. By that point, it may be too late to stop the attack.
A good fraud prevention strategy can improve your bottom line.
Businesses manage a variety of costs, and fraud prevention is often seen as just another expensive expense. What e-commerce businesses need to understand, ClearSale analysts emphasize, is that the quality of a company’s fraud prevention strategy can have a huge impact on a retailer’s bottom line.
A comprehensive fraud protection strategy can help your business by:
• Protecting against chargebacks: With significant fines, not to mention the cost of merchandise and shipping, chargebacks can quickly eliminate profit margins.
• Increasing your order approval rate: A hybrid solution that combines human analysts with artificial intelligence provides a more complete data set and more effective fraud protection, giving you more confidence when approving orders.
• Minimizing fraud as a percentage of profit: This number has been growing steadily, reaching 47% in 2016. By preventing fraud, you’re not only protecting your business from this predictable expense, you’re also increasing customer trust and loyalty.
• Maximize resources and labor budget: There will always be an initial expense with an outsourced solution. But over time, this expense will typically prove to be less than maintaining an in-house protection team. An outsourced solution can also protect you from reputational damage and lost opportunities from sales that never happen.
Consider Several Factors Before Choosing a Fraud Protection Solution
To prevent large-scale attacks on their e-commerce business, smart business owners need to establish a concise plan that covers a variety of transaction types and situations. While businesses may initially evaluate fraud protection solutions based on the promise of reduced chargeback costs or the cost of outsourcing a fraud team, ClearSale analysts want you to know that there are other factors that are just as, if not more, important to consider:
• Ensure you have high-quality data at your disposal: One important factor that businesses often overlook is the quality of the information available for analysis by the fraud protection solution. Often, in the interest of improving the end-user experience, companies do not collect enough information from consumers during checkout.
As a result, little information reaches fraud analysts, which could skew the final decision and make it harder to determine whether or not a transaction is fraudulent.
• Measure transaction rejection rate: Analysts say this is perhaps the most important element when evaluating a fraud prevention strategy. While any anti-fraud strategy will work to block transactions and reduce chargebacks, the real question is: How many transactions are you declining? The best strategy is one that analyzes transactions in a cost-effective, time-efficient manner, easily identifying and flagging only suspicious orders.
You could be losing revenue if you’re rejecting more transactions than necessary, hence the importance of measuring your rejection rate.
• Distinguish legitimate from fraudulent customers: If your system can’t tell the difference between the two, you could be losing more than just revenue. You could be sacrificing loyal customers who are frustrated by declined transactions. By reducing the number of rejected legitimate transactions, you can increase your sales and profits.