eCommerce fraud is a multi-billion-dollar problem, causing severe financial losses to businesses. Fraudulent orders not only hurt profits but also lead to additional costs like shipping expenses and chargebacks. To combat this menace, eCommerce companies are investing heavily in fraud prevention tools.
The ever-evolving eCommerce landscape is giving rise to new forms of fraud, driven in part by the adoption of innovative payment methods like Buy Now Pay Later. As a result, the eCommerce fraud detection and prevention market is on a trajectory of rapid growth.
Fraud management is a substantial financial burden for eCommerce companies. Different regions and company sizes allocate varying percentages of their revenue to combat fraud, with smaller businesses and enterprises facing higher costs.
ECommerce fraud goes beyond the immediate loss of revenue from fraudulent orders. It encompasses wholesale costs, shipping and fulfillment expenses, chargeback fees, and processing fees, significantly impacting a business's bottom line.
eCommerce fraud takes various forms, from payment fraud to phishing attacks and friendly fraud. Understanding these forms is essential for crafting effective prevention strategies.
Account takeovers pose a significant threat to eCommerce businesses, with a substantial percentage of merchants regarding it as the most critical fraud risk.
eCommerce companies use a variety of tools and strategies to prevent fraud, with the majority planning to allocate more resources to fraud prevention in the future. Two-factor authentication is widely regarded as one of the most effective measures.
Consumers also play a role in eCommerce fraud, with a notable percentage engaging in return fraud and contributing to payment fraud occurrences.
As eCommerce continues to grow, so does the threat of fraud. While complete eradication of fraud may be elusive, leveraging technology to verify shopper identities and implementing measures to reduce fraudulent refunds and returns can help safeguard revenue for online retailers.
In conclusion, eCommerce companies must remain vigilant in their fight against fraud, adapting to the ever-changing landscape and investing in robust prevention tools and strategies to protect their businesses and customers alike.