When it comes to fraud, online retailers and their customers see things very differently, according to the results of a new study from Riskified. While nearly 40 percent of retailers strongly believe they are doing everything they can to prevent fraud, only 20 percent of consumers feel the same way.
Eighty-two percent of U.S. and European retailers polled by the New York City-based antifraud technology provider reported an increase in fraud attacks since the beginning of the pandemic with promo abuse and account takeover as the most common fraud types identified. More than a quarter of retailers said fraud has significantly impacted their profitability.
Another disconnect between retailers and consumers regarding fraud prevention is the relative regard each holds for two-factor authentication. The study found consumers felt 2FA was the most effective fraud prevention tool while U.K. and French retailers said it was the most damaging solution to their revenue, and the second-most damaging for U.S. and German retailers, because of the friction it can add to customer experience.
“It’s no surprise that the rapid growth of e-commerce has also led to a rise in e-commerce fraud, and as our research shows, the impact is significant for both merchants 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, merchants lost $17 billion to e-commerce fraud in 2020, and that number is expected to exceed $25 billion in just three years.”