Introduction to E-Commerce Fraud
Whether you’re a longstanding multichannel retail organization with millions of dollars in sales or a small retailer getting your business off the ground, e-commerce fraud is aggravating and expensive.
Growth in Fraud Attacks on Merchants
E-commerce fraud is on the rise. Fraud attack rates have increased sharply year over year.
In 2012, payment card fraud losses incurred by merchants and card issuers in the US alone totalled $5.6 billion, with $2.6 billion of that being card-not-present fraud. In 2018, the US total is projected to be $9.1 billion, with $6.4 billion being CNP fraud.
Globally, losses incurred by merchants and card issuers due to fraud grew from $1.5 billion in 1993 to $3.75 billion in 2003. From 2003 to 2013? The number leapt to almost $14 billion. Two years later, it skyrocketed to $21.84 billion.
According to Experian, data breaches are one of the biggest drivers of credit card fraud. As private data is stolen, it gets sold to fraudsters who use it to attack retail businesses. Considering the number of data breaches that took place in 2017, including the massive Equifax data breach, e-commerce retailers will need to batten down the hatches and prepare for a tsunami of fraud attempts in the near future.
Cost of Fraud Attacks
The repercussions of fraud are serious. Becoming a victim of fraud means dealing with:
Every dollar lost to fraud costs merchants $2.66. For organizations selling high-tech goods or selling primarily through remote channels, that number leaps to $3.48 per dollar of fraud.
Fraud can take a large bite out of a company’s bottom line, and can even put the future of the company in jeopardy.
To fight it, the first step is to understand what types of fraud attacks merchants might face.