Fight Ecommerce Fraud and Provide a Frictionless Customer Experience

Ecommerce businesses have seen the online traffic floodgates burst open in recent years. Unfortunately, fraud has increased alongside the surge in traffic, and the way some ecommerce businesses react may be turning away customers. 

Ironically, as companies ramp up their fraud defenses, it’s sparking losses that far eclipse those caused by fraud itself. Too often, ecommerce merchants will try to protect customers by relying on stronger fraud-defense systems, only to see those very systems churn out false declines, which frustrates customers and turns away business.

If you want to fight ecommerce fraud without losing long-term business, it takes a proactive approach. In this article, we lay out ways for you to cut down false declines, empower your fraud risk teams to quickly identify trustworthy customers and provide a frictionless customer experience.

How Traditional Fraud Prevention Undercuts Ecommerce Companies

It may seem counterintuitive, but fraud prevention is costing ecommerce companies massive sums of money. As ecommerce companies build up restrictions, their fraud-detection systems are flagging hundreds, or even thousands, of transactions that are made by people with valid online identities. 

Unfortunately, one study estimates between 30%-70% of declined orders are actually false declines, and annual revenue losses from payment declines are expected to reach more than $700 billion by 2022—and that’s just the loss of immediate revenue. Perhaps even more damaging is the loss of valued customers and their lifetime revenue as well as the reputational impact to a company’s brand. After all, 33% of customers say they’ll drop a retailer forever after a purchase decline.

Essential Ecommerce Fraud Prevention Best Practices

In order to keep false declines from burning up revenue, fraud risk managers need a way to enable their systems and analysts to quickly and accurately identify trustworthy customers without incurring additional losses due to transactional friction. 

Here are the three best ways to please customers and prevent ecommerce fraud at the same time:

1. Use a proactive approach to fight fraud.

The first way to reduce customer friction as you eliminate fraud is to switch your company’s fraud approach. That means moving away from reactive fraud protection and shifting toward proactive fraud prevention. 

Wondering how? Start by viewing fraud holistically. Rather than searching for one-off fraud red flags, examine the full story behind an online customer’s identity. That way, your team will see more context that backlights each transaction, and it will be easier to see which purchases are legitimate.

2. Identify trust through connections.

Instead of simply shutting down transactions at the first sign of potential fraud, ecommerce companies can save time and money by identifying trust. Every customer has woven a massive web of connections throughout the broader online community, and these interactions can tell you who is trustworthy or acting out of character. 

When your ecommerce company’s manual review teams rely on systems that identify trust, rather than only highlighting suspicious actions, they’ll have what they need to weed out actual fraud from false flags. Ultimately, that means they’ll spend less time searching through details, and your customers will be able to complete transactions without interruption. 

3. Use advanced tools to quickly verify or decline flagged transactions.

If your manual review teams are trying to pull together an online customer’s full identity story on their own, it could take a lifetime. That’s why the best way to prevent fraud is to give your teams and analysts an advanced platform that’s fueled by deep-rooted identity data and connections. 

For instance, Pipl’s platform has spent decades collecting and connecting identity information. That means “online identities” are collections of associated personal, professional, social and demographic information. And Pipl’s index contains over three billion of these identities, covering more than 97% of U.S. adults. 

Unlike traditional databases of identity data, Pipl’s online identities are deeply interconnected, showing you exactly who is connected to a customer and how they’re connected. Why is that important? Because fraud rarely happens between people who know each other. You can access this trove of identity information via Pipl Trust, which enables systems and analysts to quickly see connections between data points in a flagged transaction. 

For instance, imagine your transaction features a shipping address that differs from the billing address listed on the transaction credit card. Because they rely on online relationships, systems like Pipl Trust could help your manual reviewer see when the transaction is simply a gift that is being shipped to a relative or coworker—a scenario that’s responsible for a countless number of false declines. Ultimately, this connection-based approach to fraud cuts out customer friction and keeps business flowing.

Learn How to Use Identity Trust to Prevent Fraud

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