Fraud in eCommerce — Taking Fashion Risks in the Expanding Global Market

If you have worked on the retailer side of eCommerce you will be all too familiar with the distinct dread that accompanies a chargeback. It can feel especially dubious when you are certain that you are putting your best efforts forward in the fight against fraud. All too often, though, we see companies who have become reliant on linear transactional data concerning fraudulent orders. Historical statistics are paramount but they do not accurately portray the whole story. In our last post, pitting CRO vs. UX, Moxxii CEO Heather Nigro, stated that in order to set a specific strategy in place for testing ‘[i]t’s imperative to understand the human intent.’ Approaching your experience with eCommerce fraud takes a similarly balanced method.

First, the Numbers…

Online Fraud, Fashion, ECommerce, eCommerce Fraud

Fraudulent order activity for the online fashion vertical currently sits below 5%.

On average, what percent of transactions are you declining as fraudulent? According to a report by our partners at Riskified anything over 10% is excessive and your business runs the risk of declining good customers along with the actually fraudulent.  With global, keyword global, eCommerce revenues expected to dramatically increase to $3.5 trillion over the next 4-5 years, alienating good paying shoppers is leaving money on the table. We believe that setting your business up online takes implicit trust. Your main touchpoint for success should be gaining the trust of your customer with a positive whole brand experience. We would suggest that before you turn away business for good you take a deeper dive into CNP transactions as well as orders missing an AVS and mismatched shipping and billing address in lieu of issuing a hard decline.

A House of (Credit) Cards…

“The overwhelming majority of online fashion purchases made with Chinese credit cards for shipment outside of China are safe.” — Riskified

Do you remember that $3.5 trillion dollars worth of eCommerce revenues that your business will hopefully be a part of? Well, $1 trillion of that net amount is projected to be just from the global, (again with that), cross-border market. Another touchpoint for your company’s success should be the ability to spot and ride a trend. One of the biggest players emerging as online consumers is China. Yet, many domestic e-tailers do not have the right methods in place to verify Chinese credit cards; even those being used domestically. What this equates to is the xenophobic thought that all foreign transactions must be fraud and that the problem lies with the buyer. On the contrary, we think that taking the time to familiarize yourself with your foreign customers and the means by which they shop online is a boon to your business.

The Human Equation

“Fraudsters care about fashion trends” — Riskified

The conclusion you should come to is that your customers are people. They are driven by trends as much as your business is. The unfortunate part is that fraud is also driven by trend. A celebrity wears a certain pair of boots your online store carries and immediately you are inundated with orders; some with multiple units in their cart. You have a right to be nervous but it doesn’t mean that all of these orders are fraud.

Holiday Fraud, Black Friday, Cyber Monday, eCommerce Fraud, Fashion

Take for example the rush of orders you receive during the holidays. It has been noted that while there is less fraud during these busy times, a staggeringly low 0.60%, that there are actually more false positive declines. Instead of relying on your old data to set thresholds for trend driven rushes on your store, setting up a proper review process is imperative.

Looking to address your issues with eCommerce Fraud? Contact us with your questions or for more information about how Moxxii can help your business.

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