E-commerce: Data, the new anti-fraud weapon!
Reliable and verified customer data reduces the possibility of misappropriation from the moment of connection and at every stage until the purchase is completed. The result is that losses of huge amounts of money can be avoided.
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According to a study by Statista in 2022, the amount of fraud on Internet payments in France would amount to 213 million euros in 2020. This will result in a loss of revenue for the online retail industry, which is also impacted by the increased budgets allocated to specialized teams and numerous anti-fraud measures.
However, when you know that some e-retailers, particularly high-volume e-retailers, have a margin rate of less than 5%, it is easy to understand why the fight against fraud has become a strategic issue in recent years.
All the more so as, at the same time, the sector’s growth opportunities are limited, due to the combined effect of the levelling off of penetration rates and the reduction of consumer budgets, in a context of global economic crisis.
Detecting the flaws of a commercial site, the eternal race of the policeman and the thief
There is no doubt that online sales professionals are making progress: increased controls, automated fraud detection, verification of bank data, cryptograms, etc. Many technological innovations have been implemented in recent years to secure online payment processes.
But when it comes to fraud, as is often the case, the thief is always one step ahead of the police. And as an expert in circumventing the rules, he always finds the loophole. Understand: if it becomes too difficult to break through the security systems of online payments, he will look for the loophole elsewhere, and in particular upstream in the purchasing process.
This is because, from logging in to their customer account to the delivery form, Internet users go through a number of steps before paying. And according to the many tricks available on the Internet to defraud a merchant site without risk, loopholes seem to exist throughout the ordering process.
What could be simpler than making a valid purchase and then contesting the transaction in bad faith with your bank, claiming identity theft, non-delivery or product non-compliance? Fraud that is much more difficult to detect by security systems and situations where the e-merchant always ends up losing.
Cross-checking data throughout the process, the best anti-fraud weapon
So how to fight? How can we protect ourselves against such disparate and increasingly inventive types of fraud? With reliable, verified data. Not just at the time of payment. But from the moment of connection, then at each stage of the ordering process, until the purchase is finalised. Because by moving up the security chain, we reduce the possibilities of misappropriation.
This need to detect fraud as early as possible in the ordering process crystallises around two key stages. On the one hand, at the time of connection to the user account, by cross-referencing geolocation data and the IP address, to check whether the buyer is really the customer, and thus to guard against identity theft. On the other hand, at the time of the delivery form, by checking the relevance of the data entered, by correcting a postal address or by cross-checking the name and address with the relevant databases.
This intelligence applied to data will also allow us in the future to go further, in particular by applying behavioural data to the purchasing process, to detect the risks of fraud from the customer knowledge stored by the CRM during previous interactions with the customer (order history, preferences, average budget, etc.).
It is then up to the retailer to manage its alert level, in a balancing act consisting of obtaining maximum security for purchases, through reinforced, even manual, control of risky orders; while maintaining the sacrosanct fluidity of the customer journey, and responsiveness in the processing and delivery of orders, a real competitive strength of the e-retailer.
But when you realise that gaining just 1% on your fraud rate can generate huge amounts of money in avoided losses, you quickly find the balance! And this is exactly the promise of this preventive data qualification approach: to transform fraud into a real source of future profit for e-retailers.
About DQE
Because data quality is essential to customer knowledge and the construction of a lasting relationship, since 2008, DQE has provided its clients with innovative and comprehensive solutions that facilitate the collection of reliable data.
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