The Importance of Fraud Protection in an Omni-Channel Retailing World
Uncover how security teams can best detect and prevent fraud from omnichannel retail transactions.
Consumers are engaging with e-commerce retailers more each year using multiple channels, payment methods, and devices. The growing demand for omni-channel shopping, browsing, and fulfillment options create a number of challenges for retailers and other merchants. These risks include increased exposure to risk and greater complexity around fraud management.
With purchasing behaviors continuously evolving, the lack of fraud protection in any business is a major problem.
65% of retailers believe they lack adequate fraud management tools to support effective fraud management in an omni-channel environment.
Omni-channel consumers benefit from more choice and convenience because they are able to pay where they want, when they want, and wherever they want. They often choose to use different channels to make purchases, check the status of an order, start a transaction in one channel and complete it in another. They also have the option to return in store and communicate over phone with customer service.
It’s a great concept and technologies like CRMs, integrated merchandising system and other tools help bridge the consumer experience between e-commerce, retail stores and back office operations.
Although creating an omni-channel approach works wonders for marketing and driving sales, it allows fraudsters to wreck havoc. For many retailers, fraud in an omni-channel business is an afterthought and a lesson hard learned.
54% of retailers say they do not have the skilled staff needed to deal with omni-channel fraud challenges, and that’s where a fraud prevention software can help.
In any omni-channel business, various avenues are being exposed to legitimate consumers creating multiple options for the hacker to exploit. By adding a fraud detection software to an e-commerce site, businesses quickly notice a shift to telephone based fraud.
For businesses that believe their purchase and return funnels are locked down, think about the many other loopholes within the purchase and return funnel. Can a consumer buy online and return in-store? Can a consumer buy online and return over the phone? How many different consumer paths can be taken?
Understanding and sealing up all of your points of vulnerability are key to preventing run-away fraud.
Protecting consumers begins with the business and the solution to stopping any fraudster from stealing data begins with a fraud protection software that understands the possible purchase and return path your products can go through. A fraud prevention solutions provider such as Precognitive can assess and identify how to patch loopholes and mitigate against threats.
It is crucial for data from different channels to be funneled through the same data store.
A frequent mistake we see is when a merchant integrates a fraud protection solution only on the web and wonders “why hasn’t the fraud ceased?” After close research, we found that the fraudster had moved on to an outlet that is not protected, such as in-app or by telephone.
It’s important for an omni-channel company to track all channels in order to prevent fraud.
If a company is having trouble linking data from every channel into one platform, look for preexisting integration and piggyback off of them. It’s no surprise that marketing gets a lot more funding than fraud prevention. Take a look at a marketing tool, such as your CRM, and you’ll find many have integrated data from their channels into their CRM.
A business will need to break down and develop a way for tracking the data from every possible channel. Consider establishing a fraud prevention department whose sole responsibility is managing this data.
Related Reading: Why It’s Crucial for Ecommerce Startups to Implement Fraud Strategy
Using the right tools, services, and software is crucial for keeping a close eye on your data. Real-time decisioning manages fraud effectively, and card-not-present fraud can be prevented through real-time rules. This utilizes artificial intelligence trained to dynamically learn and recognize fraudulent behaviors quickly at scale.
As the way customers engage with brands continues to evolve, so must the best practices for fraud prevention in omni-channel spaces. Real-time fraud detection is one of many potential value-added services that a fraud prevention software can offer, and one that deserves particular focus as the trend towards omni-channel continues to grow.