Posted by Atlanta, US: The frauds in the E-commerce segment has increased 35 % in 2018 compared to 2017. From mid to large-size ($10 million plus in sales) e-tailers have seen an significant increase in the fraud incidents, according to the 2018 True Cost of Fraud study for the e-commerce released by LexisNexis Risk Solutions – a part of RELX Group.
The cost of fraud for mid to large-size companies remains higher than for smaller companies. Every $1 of fraud results in $3.20 in fraud-related costs, compared with $2.32 for smaller businesses, which includes chargeback fees, merchandise replacement and labor costs for employees, according to the LexisNexis Fraud Multiplier.
“E-tailers must remain vigilant in battling fraud, because the threat has grown since 2017. Larger e-tailers have seen nearly a doubling of successful fraud attempts targeted at their companies year-over-year, which reflects this danger,” said Kimberly Sutherland, Senior Director, Fraud & Identity Management Strategy, LexisNexis Risk Solutions.
“Increased levels of successful fraud attempts indicate clearly that despite ongoing efforts, the solutions implemented by e-tailers may not be optimal. As these businesses grow and expand into digital goods and m-commerce, so does the opportunity for fraud, which makes the need for increased intelligence around both the digital transaction and the consumer that much more critical,” added Sutherland.
LexisNexis Risk Solutions surveyed 200 risk and fraud executives in retail organizations that earn 80% or more of their revenue through online or mobile sales channels. The executives who responded cite cloud-base applications, digital subscriptions, mobile apps, downloadable software, online gaming and music streaming products as major contributors to higher levels of fraud. Credit card transactions remain the largest payment method for fraudulent transactions, while alternative online payments also contribute to rising successful fraud rates among e-commerce merchants.
There is no one size fits all approach for e-commerce companies looking to prevent fraud. Factors such as digital versus physical goods and mobile-based transactions versus non-mobile transactions must be assessed when tailoring the best fraud prevention solutions for an individual business. Those that layer solutions by identity authentication and transaction / identity verification tend to experience lower costs of fraud and spend less budget on manual reviews, improving their bottom line, as well as the overall customer experience.