Half or UK retailers believe they are doing everything they can to prevent e-commerce fraud, but far less consumers (17%) share their confidence.
The stark disconnect between retailers and shoppers on the matter of online shopping fraud has been highlighted by new European and US data released by Riskified, an e-commerce enablement and fraud-prevention solutions provider.
The research, which comprised 4,000 consumers and 400 retailers across the US, UK, France and Germany, also shows how widespread online retail fraud is, the extent of its enduring financial impact and how it is perceived in the eyes of shoppers versus retailers.
Increase in fraud attempts
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 e-commerce revenue to fraud in 2020.
More than half (55%) of all retailers stating that they were confident in their ability to prevent e-commerce 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 would not 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.
Peter Elmgren, chief revenue officer at Riskified, said: “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 retailers and consumers.
“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 £12.3 billion to e-commerce 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.”