The Consumer Outlook on Ecommerce Fraud
In 2020, ecommerce sales accounted for 18% of all retail sales worldwide, a steep increase from the year before, which was 13.6%. The share of ecommerce sales is expected to reach 19.5% by the end of this year, and 21.8% in 2024.
As the ecommerce industry continues to rapidly expand, consumers’ awareness and concern of ecommerce fraud has sharply increased. Over half of retailers in the UK believe they are doing everything in their power to prevent ecommerce fraud, but only 17% of UK shoppers share this confidence.
The new European and US data released by Riskified, a fraud prevention and ecommerce support solution provider, highlights the clear disconnect between retailers and buyers on the topic of online shopping fraud.
The study included the online shopping experiences of 4,000 consumers and 400 retailers in the U.S., U.K., France, and Germany. It also showed the prevalence of online retail fraud, the extent of its lasting financial impact, and the contrasting perception of buyers and retailers on the matter.
The study found that just 55% of all online retailers were confident in their ability to prevent ecommerce related fraud, and only 34% of all consumers confirmed that they could confidently trust their favourite online retailers to keep their details and accounts safe from fraudulent activity.
Moreover, in the UK specifically, 27% of online consumers said their concerns over online shopping continue to grow as awareness and evidence of ecommerce fraud rises, and 51% of the consumers interviewed believe that ecommerce retailers will find it continually more difficult to prevent fraud in the years to come.
In addition to this, the threat of fraudulent ecommerce activity poses prominent risk to the image and success of many online UK retailers, as consumers are now far more likely to only go through with online transactions where they feel confident that their online safety will not be compromised. Not only did 39% of UK consumers say they would blame the retailer if their account was subjected to fraudulent activity, but 67% said they would not buy online again from a retailer where their account was in any way compromised. There is now great pressure on retailers to protect their online customers, and to implement the best practices possible to reduce all risks of fraudulent activity.
Unfortunately, in the UK alone, a staggering 82% of retailers reported that they have witnessed an increase in ecommerce fraud attempts since the pandemic began, with Card Not Present (CNP) fraud having the biggest negative impact on revenues and accounting for 60% of all recorded fraudulent activity.
What is CNP?
CNP is a kind of fraudulent payment made through online transactions, telephone, and mail, where a card is not presented to a merchant for a visual check. Typically, a CNP fraud occurs when information on a payment card is stolen or purchased on the Dark Web. Payment card information can easily be accessed from customers’ online ecommerce accounts where a weak password has been used, or if the website does not have adequate security measures in place.
Two-factor authentication was recognised by respondents as the most effective tool for ecommerce fraud prevention. However, it was also ranked as the most damaging to revenue for UK and French retailers, leading to an increase in customers abandoning their online shopping carts. This can be attributed to the friction it can add to the online ecommerce experience, as customers quickly tire of lengthy identity and checkout processes.
How You Can Stay Safe Online
As an end user and customer of online shops, there are safe practices you can adhere to to protect yourself from becoming a victim of ecommerce fraud.
1. Buy from trusted sources – Use brands and shops that you are familiar with or have used before and check the ratings of individual sellers on sites such as Amazon or EBay. For Internet purchases, make sure you use the internet security protocol called 3D Secure – Verified by Visa/SecureCode/SafeKey. Ask your bank or your card issuer about it.
2. Never send your card number, PIN or any other card information to anyone by email.
3. Whenever possible, do your online shopping at sites that use full authentication (Verified by Visa/MasterCard Secure Code).
4. If the website does not support full authentication, make sure the data transfer is appropriately protected. Check that there is an icon of an unbroken key or locked lock at the bottom of your browser window and that in the address bar the URL begins with https:// instead of http://.
5. If you are not buying anything, don’t submit your card details. There are for example games and fake lotteries online which sole purpose is to get your credit card information.
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