As we talked about in my previous article, businesses of all sizes should be concerned about finding ways to reduce online fraud. According to the 2019 AFP Payments Fraud and Control Survey, 82% of companies were targets of payment fraud last year.
The problem is, many companies have a tendency to fight fraud at the expense of their customers. One of the main ways they do this is that they implement security measures that make it more difficult for customers to buy from them. So, while the business may be moderately safer, the end result is that they’re losing customers in the process.
How to Effectively Fight E-Commerce Fraud
So how can businesses fight the most common types of fraud without annoying and losing their customers in the process? Listed below are four easy ways you can get started.
Take advantage of customer data
One of the benefits of taking an omnichannel approach is that you will begin to gather data on your customers. This data will show you patterns in your customer’s buying behavior. Once you understand their shopping patterns, you won’t inadvertently block them from making a legitimate purchase.
But keep in mind that customers’ buying habits will change periodically. This is especially common during the holiday season when consumers are spending more than usual.
Set online password specifications
An easy way to fight fraud is by setting online password specifications for all customer accounts. Require all passwords to use a combination of uppercase and lowercase letters, numbers, and symbols.
You can also require customers to periodically change their password. However, you’ll want to tread a fine line here because this could quickly become off-putting to customers.
Use the Address Verification System
Once most merchants made the switch to EMV chip technology credit card payment became significantly safer, however other types of online credit card fraud became more prevalent, i.g. Card-not-present. One of the best ways online merchants can prevent Card-not-present fraud is by using the Address Verification System (AVS).
This system adds an extra layer of security to any online transactions. Essentially, AVS is a system that matches the customer’s information with the information on file with the credit card issuer. It matches the street address and zip code of the cardholders, significantly reducing the chance of credit card fraud.
Use a multi-layered fraud protection system
Your best chance of reducing fraud is by implementing a multi-layered system. Any system that you implement will have potential risks and downsides. By implementing a multi-layered fraud protection system, you’ll have the best chance of protecting both your business and your customers.
And finally, keep in mind that your payment fraud prevention strategy will need to be reviewed and updated regularly. The fraud landscape will continue to change, and so will the needs and wants of your customers.
Always be aware of the potential trade-off between preventing fraud and keeping your customers happy. Know what your level of risk tolerance is and always keep your customers top of mind.
To your success!