Nearly half (49%) of consumers have reported being a victim of credit card fraud where their card information was illegally used by someone else, according to a survey from Riskified. Among these victims, 49% abandon the retailer entirely after learning of the fraud, with 29% blaming the merchant that approved the fraudulent purchase.
Retailers also can lose customers when they adopt strict anti-fraud measures. Merchants often decline orders out of caution, which means they sometimes reject good, honest customers. Up to 30% of shoppers say they have had their purchase wrongly declined, and 57% of those declines happen to returning customers, with a corresponding negative impact on their satisfaction and return shopping. These false declines end up robbing retailers of as much as 5.5% of their annual revenue.
Approximately 42% of shoppers who experienced a decline moved on, either abandoning the purchase completely (28%) or shopping with a competitor instead (14%). Retailers have to be smarter about how they review and approve orders if they want to keep these shoppers, said Eyal Raab, VP of Business Development at Riskified.
“A lot of retailers are still using legacy solutions, and they haven’t caught up to the way people shop,” said Raab in an interview with Retail TouchPoints. “For example, some retailers reject orders with an AVS mismatch (when the billing address used for the purchase doesn’t match the billing address on file with the credit card issuer). Given how many people shop on their phones these days, and how easy it is to mis-key a ZIP code, that’s going to cost retailers a lot of legitimate orders. And as we saw, declining legitimate customers now can have long-term repercussions. Retailers need to use solutions that look at the whole story of an order, and approve or decline based on more data and with more accuracy.”
38% Of Shoppers Admit To Creating Multiple Email Addresses For Discounts
Retailers have another growing worry: fraud in the form of account takeovers. Fighting this form of cybercrime is complicated, because it’s difficult to distinguish between criminal hackers attempting an account takeover and opportunistic consumers using multiple email addresses in order to take advantage of promotional discounts. In fact, 38% of shoppers admitted that they have created multiple email addresses to gain additional online shopping discounts. While not illegal, this type of discount abuse can seriously impact merchants’ bottom lines. Raab recommended that retailers review account logins and account creations as a deterrent.
“We strongly recommend this to prevent account takeover attacks, but it can also be used to prevent promotion abuse,” Raab said. “A fraud prevention solution can review the account being created — looking at things like the IP address, device being used, etc. — and compare them to existing accounts. When a shopper is trying to create multiple accounts to abuse a promotion, the merchant can then respond however they prefer.”
Poor Checkout Experiences Are The Prime Reason For Cart Abandonment
Beyond fraud risks, the survey also analyzed cart abandonment, which continues to be a big problem for merchants: 84% of shoppers reported abandoning a purchase in progress. Some of this behavior is unavoidable; customers may encounter unexpected shipping costs or simply change their mind about a purchase. However, a difficult checkout process is often the culprit: more than 71% of cart abandoners blamed the checkout process — for being overly complicated, not mobile optimized or seeming untrustworthy — as the reason they didn’t complete the transaction.
“Creating an optimized mobile checkout process is really hard to do,” Raab said. “Retailers spend huge amounts of time and money to create a mobile experience that’s as good as their in-store experience. And then they squander it with a balky fraud-review solution that rejects legitimate customers or takes forever to approve orders.”