Online Businesses Are Losing The Fight Against Fraud
Some interesting stats on the fight against online fraud.*
- The average online merchant uses 5 automated fraud detection tools.
- Merchants manually review an average of 25% - 50% of orders.
- The average reject rate of online orders is 4.1%
- It is common to find that 25% - 50% of all rejected orders are actually valid.
- With a goal of .2% in losses due to fraud, most online merchants have losses of up to 1.4% including chargebacks and credit reversals.
Lessons to take away from these stats:
- If your online business is using 5 automated fraud detection tools and then also manually reviewing 50% of all orders, you need to optimize your automated tools.
- When online businesses report their losses due to fraud, most do not take into account that 25% - 50% of orders that they have tagged as fraud are actually valid. These are lost profits.
- With losses of 1.4% most online businesses are falling way short of a more acceptable rate of .2%. The 5 automated and then manual review process that the average business is using is not up to snuff.
Take a look at your fraud protection. If you find that these stats describe your business, you need to take steps to optimize your fraud protection tools. Keep up with what is happening in fraud protection and make sure you are using the most up to date tools. Employ fraud protection tools that allow you to reduce your manual review process. Optimize your tools to make sure that valid orders get processed while fraudulent ones are weeded out.
Download the FREE whitepaper, Reduce Fraud: Stop Fraudsters Before They Strike, and take the first steps in taking back your business.
* Source: CyberSource 2008 ePayment Management Project Guide
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