In our original research report, What Consumers Thought About Ecommerce, Fraud & CX in 2021 we discovered that 45% of consumers shop online at least once a week.
And those who were once uncomfortable with the idea of making purchases on their PCs, phones, and even social media channels are now embracing it. So much so, nearly 66% of people told us they are more likely to use their mobile phone for purchases.
And what about younger consumers? They’re already online in droves. 55% of millennials are shopping online at least once a week.
Have any of these ecommerce fans been burned by fraud? Sure, but it’s still not stopping them: Although 68% of our study respondents had experienced some form of ecommerce fraud, most said they felt shopping online was as safe or safer than shopping in a store.
That’s good news for small ecommerce businesses.
As a business owner, your job is to provide a great ecommerce experience … while protecting your online business from fraud … without declining legitimate orders. It’s a lot to juggle, especially considering how rapidly ecommerce fraud is growing.
Ecommerce fraud is expected to grow exponentially over the next five years. The Federal Trade Commission received 436,000 fraud reports from consumers between January 2020 and April 2021, equaling $399 million in losses. And the average fraud amount rose 35% in April 2020 – early in the pandemic.
A Juniper Research study entitled, “Online Payment Fraud: Emerging Threats, Segment Analysis & Market Forecasts 2021-2025” estimates ecommerce payment fraud will exceed $206 billion cumulatively through 2025. China is projected to be hit the worst with over 40% of global losses equaling over $12 billion by 2025.
The biggest sources of fraud are related to credit cards and account takeovers (ATO):
Fraudsters also found new areas of opportunity, thanks to the new ways consumers shopped during the pandemic. BOPIS (buy online, pickup in store) fraud increased by 55%, and buy now, pay later fraud schemes have popped up as well.
Learn how fraudsters mine social media for credit card and account information: How Social Media Hacks Compromise Your Fraud Protection Efforts
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The repercussions of fraud for a small business can be serious leaving you facing:
The cost of lost merchandise
The cost of shipping and handling on fraudulent orders
Chargeback fees from the issuing bank
Negative hits on your company’s reputation
Potential loss of your account
Every dollar lost to fraud costs businesses $3.36, and that amount continues to increase by over 7% every year.
Fraud can take a large bite out of a company’s bottom line and can even put the future of the company in jeopardy. When you proactively stop fraud from impacting your business, you get the opposite impact.
Think about the time and resources you allocate to dealing with fraud and the cascading financial impacts. For small businesses, battling fraud can be so time-consuming, it may seem like a line of business in and of itself … except this one depletes your bottom line.
Implementing a fraud prevention solution can solve that problem and allow you to focus on what’s most important for your business growth. You’ll have less churn, better use of resources, more time to spend on sales and fulfilling orders, and you’ll get to keep more of your hard earned revenue.
But to successfully fight fraud, you need to start by understanding the types of internet fraud attacks small businesses can face.