When it comes to fashion and beauty ecommerce, particularly those selling luxury items are often targeted by fraudsters. Obviously, merchants make every effort to avoid accepting fraudulent transactions and incurring the related chargeback. Unfortunately, due to eCommerce fraud, this leads to risk-averse policies that result in keeping away good customers along with fraudsters. We have seen many cases of retailers missing out on development opportunities due to fear of fraud. In this post, we share some of the classic fraud patterns and things to keep in mind, in the fashion vertical, and best practices to avoid con activities without turning away good customers.
Payment Frauds in Fashion eCommerce
So how serious is the state of fraud in the online fashion industry? To know fraud rates, there are two central metrics:
- chargeback rate – the percentage of overall orders for which a chargeback was incurred, plus
- decline rate – the percentage of overall orders declined by the merchant
This way, the fraud rate reflects the number of orders rejected because of the fear of fraud and the number of approved orders that turned out to be fraudulent.
By rejecting an order, you drop not only the revenue from the declined transaction, but also the acquisition cost goes down the drain – all the budget as well as the effort put in bringing the customer to your own site and having him or her place the order only to have it declined.
Our advice to you is – never decide to approve or decline an order based on a single data point. Every order should be reviewed holistically, considering all the accessible information. We hope the following insights and tips will help you differentiate friend from a fraudster.
Tips for Ecommerce credit card fraud prevention!
Stats differ between businesses for sure. Every store has a unique selection of items, and it may be that for your store a certain bag, or even a particular brand you carry, is targeted by fraudsters. That’s why it’s very important to track all the chargeback you incur, mainly chargeback related to fraud for instance- unauthorized card use. Once you spot the high-risk items and brands, it will be easier to know which orders should be reviewed with more care.
Pay Attention to the Shopping Cart!
One hint of shopper behavior is the item mix in their shopping cart. Many merchants follow customer behavior around the shopping cart for purposes excluding fraud – such as recommending items to “complete the look”, however this same data can be used to prevent fraud.
Like, purchasing one designer handbag is a common thing than buying a dozen designer handbags at once.
Track and Analyze Browsing History!
Another great indication of online behavior can be browsing patterns. Overwhelmingly, a regular customer will take some time to surf your site, look at several items, click to see the available colors as well as item photos from various angles. When purchasing a costly product, genuine shoppers are likely to test out your store’s returns along with guarantee policies. Fraudsters, in contrast, often have very different online behavior.