Riskified, an eCommerce enablement and fraud-prevention solutions provider, has released new European and US data revealing that the issue of online shopping fraud is seen through two different sets of glasses by retailers and shoppers.
The research, which comprised 4,000 consumers and 400 retailers across the US, UK, France, and Germany, highlights how widespread online retail fraud is, the extent of its enduring financial impact and how it’s perceived in the eyes of shoppers versus retailers.
In the UK, more than three quarters (82%) of retailers said that they have seen an increase in fraud attempts since the pandemic began, with Card Not Present (CNP) fraud having the biggest negative impact on revenues (60%) followed by Promo Abuse (48%).
The impact of fraud on retailers’ bottom lines is severe, with 26% of global retailers saying that fraud is significantly damaging their profitability. Worse still, over one-third (34%) of global retailers said they had lost between 5% and 10% of their eCommerce revenue to fraud in 2020.
A confidence gap between retailers and consumers globally was also unearthed, with more than half (55%) of all retailers stating that they were confident in their ability to prevent eCommerce related fraud, despite only 34% of all consumers trusting in retailers’ ability to prevent said fraud.
In the UK specifically, more than a quarter (27%) of online consumers said their concerns over online shopping continue to grow and 51% 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. Not only did 39% of UK consumers say they would blame the retailer if their account was compromised, but as many as 67% 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 customer experience.
The use of new technologies to smooth the payment process and reduce fraud is becoming more prevalent as well.
“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,” said Peter Elmgren, Chief Revenue Officer at Riskified. “Fraud presents unique challenges for retailers who want to protect their businesses while also delivering a seamless and safe experience for shoppers. According to Juniper Research, retailers lost £12.3billion to eCommerce fraud in 2020, and that number is expected to exceed £18billion 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.”