Chargeback Protection During eCommerce Demand
During the past five weeks – from the end of March through April – some industries have seen big changes in eCommerce transaction volumes as consumers look for at-home activities, and more recently, ways to spend their stimulus checks.
According to data Kount is tracking, U.S. eCommerce transaction volumes continue to rise and have reached a new high point during the third week in April as compared to the same period in 2019.
Consumers are spending more on everything from necessities, to sporting goods, to crafts and wine, and Kount’s data shows that spending on pet supplies is also increasing.
The additional transaction generation is a boost for companies that are now seeing a spike in purchases that exceeds 2019 Black Friday and Cyber Monday week records. This is even true when taking into account declines in some industries due to current restrictions.
Kount data shows a spike in 2020 retail purchases in April compared to the same period in 2019.
Stimulus checks are set to reach consumers who haven’t yet received them over the next several months. This means that continued work from home practices and school closures, not to mention the drive for at-home entertainment, will continue to contribute to increases in eCommerce sales.
Businesses are quickly adapting to meet new digital demand posed by new consumer spending habits during the coronavirus pandemic. They are responding to consumers with popular services such as expedited shipping and Buy Online Pick Up In Store.
With the increase in digital spending, chargebacks are also increasing
The clear indicator that digital payments fraud is high are resulting chargeback and decline rates. According to a recent article, as a direct result of the pandemic, “We expect to see a wave of chargebacks flooding the market for months even after the pandemic subsides.”
Reduced capacity to review transactions, coupled with higher volumes in new channels can be a recipe for out of control chargebacks. Chargebacks from criminal and friendly fraud have an immediate financial impact on businesses: they lower profits, increase operational expenses and, in some cases, can force businesses into excessive dispute monitoring programs. Getting ahead of chargebacks and fraud is critical. Businesses can’t achieve the right fraud prevention results alone, particularly if they are focusing on meeting consumer demand for eCommerce.
Automated fraud management can improve chargeback protection
With the support of a strong chargeback prevention solution, companies are seeing important results. Effective chargeback management can alleviate a good portion of fraud posed by increased eCommerce demand. Rather than simply relying on a time-consuming manual review process, a strong AI-driven fraud prevention solution that is able to link risk and fraud signals in real-time to uncover the level of trust behind the transaction can automate red flag fraud warning signals, including:
- Bulk orders
- Large-ticket transactions
- Billing address differs from shipping
- Rush or overnight delivery requests
- Multiple order attempts with varying inputs
- Multiple orders made using different cards, but same shipping
As fraud advances and relies on advanced artificial intelligence (AI) practices to defraud consumers and businesses alike, advanced approaches are needed. A strategy dependent on manual reviews or rules-based systems alone won’t scale, or be as accurate as advanced, AI-driven fraud prevention.
How do companies see reduced chargeback results?
A winning chargeback strategy is an investment that will continue to pay off long after the economic and cultural situations return to normal and the impacts from the coronavirus subside.
When businesses rely on fraud detection that runs dynamic supervised and unsupervised machine learning in parallel, they can detect both fraud anomalies and emerging trends, and they can automatically evaluate and identify different types of fraud.
Seek expert fraud prevention support
Fraud prevention is not something that businesses can tackle on their own. It requires data – lots of deep data that is informed by millions of transactions over years and geographies. With advanced AI algorithms trained on this data, businesses can accurately identify and deliver a level of trust for each transaction. Businesses can remove the threat of chargebacks by automating their ability to determine potential fraud.
Kount’s AI-driven eCommerce Fraud Prevention Solution produces Omniscore, an actionable transaction safety rating that simulates the judgment of an experienced fraud analyst. By upgrading their fraud prevention, businesses see the following results: