RETAIL ENVIRONMENT
Fraud on the rise for retailers
More than three quarters (82 per cent) of retailers have seen an increase in fraud attempts since the pandemic began, according to new research.
A survey of 4,000 consumers and 400 retailers across the UK, US, France and Germany for Riskified, a fraud prevention solutions provider, found that there is a disconnect between retailers and shoppers when it comes to fraud rates.
While nearly half (48 per cent) of UK retailers strongly believe they are doing everything they can to prevent e-commerce related fraud, just 17 per cent of UK consumers feel the same.
When it comes to the most prevalent types of fraud, Card Not Present (CNP) fraud had the biggest negative impact on revenues (60 per cent) for retailers followed by Promo Abuse (48 per cent).
The survey found that the impact of fraud on retailers’ bottom lines is becoming significant, with 26 per cent of global retailers saying that fraud is significantly damaging their profitability.
In addition, over one-third (34 per cent) of global retailers said they had lost between 5 per cent and 10 per cent of their e-commerce revenue to fraud in 2020.
A confidence gap between retailers and consumers globally was also unearthed, with more than half (55 per cent) of all retailers stating that they were confident in their ability to prevent eCommerce related fraud, despite only 34 per cent of all consumers trusting in retailers’ ability to prevent said fraud.
In the UK specifically, more than a quarter (27 per cent) of online consumers said their concerns over online shopping continue to grow and 51 per cent of consumers believe that retailers will find it even harder to prevent fraud over the next year.
Long-term brand impact was a prominent factor for consumer confidence in online shopping too.
A total of 39 per cent of UK consumers say they would blame the retailer if their account was compromised, but as many as 67 per cent said they wouldn’t buy online again from a shop where their account was compromised.
When it comes to fraud prevention, two-factor authentication was recognised by respondents as the most effective tool.
However, it was also ranked as the most damaging to revenue for UK and French retailers, and the second most damaging for US and German retailers. This can be attributed to the friction it can add to the customer experience.
Commenting on the results, Peter Elmgren, chief revenue officer at Riskified, said: “It’s no surprise that the rapid growth of eCommerce has also led to a rise in eCommerce fraud, and as our research shows, the impact is significant for both retailers and consumers.”
“According to Juniper Research, retailers lost £12.3 billion to eCommerce fraud in 2020, and that number is expected to exceed £18 billion in just three years. By continuously learning from our retailer network and feeding real-time data into our sophisticated machine learning platform, we’re able to help our retail partners build trust and confidence in the online shopping experience.”
