eCommerce Fraud: How To Protect Your Store

As retailers face the start of a holiday shopping season like no other, there is one dramatic change in consumer behavior that they overlook at their peril. A startling portion of shoppers appear to be ready to bend and break the rules to illegitimately make off with free or discounted products − and this approach to eCommerce fraud can seriously hurt online businesses.

eCommerce Fraud in 2020

A Signifyd survey shows that 40% of U.S. consumers said they had falsely told their credit card companies that a charge for an online purchase on their account was fraudulent when they knew it was not.

And that was only the beginning of the misbehavior that consumers self-reported. A significant number of respondents said they had cheated on promotions to get discounts they didn’t deserve. A similar number said they had falsely claimed that an item they had ordered online never arrived or that the product that did arrived appeared much differently than how it was described online.

As we move into the tenth month of the COVID-19 pandemic, retailers have braced for big changes in the way consumers will shop this holiday season. Ecommerce orders spiked and have remained high, even as brick-and-mortar stores reopened.

Creating Safe In-Store Shopping Experiences

Safety has become the new customer experience in stores as merchants have stepped up their social distancing game with signage, one-way aisles, exit-only and entrance-only doors. They have associates wearing and distributing face masks. Many omnichannel retailers have launched or dramatically improved their buy online pick up in store services and added curbside pickup to their fulfillment channels. 

But another perilous challenge might be lurking as retail moves into its most important selling season of the year. Consumer abuse has been on the rise for some time, but it appears that the strain of lockdowns, job losses and the possibility of falling seriously ill has taken a toll on many consumers’ sense of fair play.

“We’ve been seeing consumer abuse increase a lot lately. I think the pandemic has caused a lot of hard times for a lot of people, and that financial pressure seems to be leading to people's moral compasses being recalibrated."

− Ryan Bermudez, Signifyd Director of Customer Success, East

It’s impossible, of course, to know how much COVID-19 and the disruption it's caused have contributed to the rise in consumer abuse. But Signifyd data shows that consumer abuse involving false claims that a package arrived are up 39% from pre-pandemic levels.

Survey Insights

And there are other indicators. In Signifyd’s September survey of 1,500 U.S. consumers conducted by market researchers Upwave, 33% of respondents admitted to lying about a package never arriving or about the item not being as described when it did arrive. 

In a January survey, when Signifyd asked consumers whether they had ever falsely claimed that an eCommerce order had never arrived, only 8% said they had done so in order to keep the product and get a refund. 

While the question was slightly different, the difference in responses speaks volumes. And it serves as a warning that retailers need to be extra vigilant this holiday season. That vigilance needs to apply to the problem of promotion abuse as well.

Signifyd’s September survey found that 31% of consumers had broken promotion or discount rules by, for instance, claiming they were making a “first-time purchase” more than once in order to get a price break they were not entitled to. 

Tips For Protecting Your Store From eCommerce Fraud & Consumer Abuse

So, if you’re a retailer faced with a rise in consumer abuse, what can you do? Some preventive measures sound a bit like they are out of “All I Really Need to Know I Learned in Kindergarten.” But sometimes the answers are in the basics.

The first line of defense to consumer abuse is to build good relationships with your customers. Signifyd’s January survey, for instance, indicated that consumers tend to behave badly when they feel they’ve been treated poorly. If an order doesn’t arrive on time or if they are not updated on a slow orders progress, it damages the customer/retailer relationship.  

The truth is, it’s harder to for customers to cheat a person or organization that they know and like. To defend your eCommerce store from customer abuse, follow these tips:

1. Make product descriptions rich and accurate.
2. Share authentic customer reviews.
3. Communicate with customers & send order confirmations and updates.
4. Fell short on fulfillment? Offer a discount on a future purchase.
5. Push back on chargebacks suspected of consumer abuse.
6. Consider enlisting outside help, such as Signifyd's Abuse Prevention solution.

Conclusion

Every holiday season comes with its outsized challenges and outsized opportunities. That’s true of our first pandemic-era holiday season, though with a different twist. COVID-19 has changed us all and has apparently changed the way consumers behave. Some might be less honest in their dealings with retailers.

But it has also changed how consumers are shopping and how many are shopping online. Those new online shoppers — and eCommerce veterans who are doing more of their shopping online — represent an expanded market for digital retailers. 

All of that makes the 2020 holiday shopping season the year to execute on customer experience. Fine-tune channels such as curbside pickup to keep customers happy, and turn to cutting-edge consumer abuse protection to keep your store safe from eCommerce fraud.