Just in Time for the Holidays: Fraud!

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Fraud

Fight_fraud2x.pngLast month, we wrote about how summer is the perfect time to start thinking about the holiday season—especially if you’re a retailer! Designing, planning, and getting ready to implement your holiday promotions (using Recurly’s coupon feature, of course!) takes time to do well and get the results you hope for.

Another aspect of the holidays that subscription businesses can start thinking about now is their fraud-fighting efforts. We know that credit card fraud tends to spike during the holidays. With so many transactions whizzing through the various systems, it can be hard to catch the fraudulent ones, and thieves know this. Fraud is also continually on the rise, although the forms it takes are ever-changing, based on the ebb and flow of vulnerabilities and prevention efforts.

recent report by ACI Worldwide found that a full 30% of global consumers have experienced some kind of card fraud over the past five years. The report also found that 14 of 17 countries studied saw an increase in fraud between 2014 and 2016. Amongst U.S. purchasers, almost 50% of us experienced fraud, giving the U.S. the third-highest fraud rate worldwide, with the added distinction of being the only country to remain in the top three from 2014 to 2016. Go team.

Our consistently high fraud rate is likely due to two key factors. Because card spend in the U.S. is so high, fraud rates in turn are likely to be higher, according to the study. Americans do like to shop, and we pay the price (literally and figuratively) in our higher fraud rates. Criminals tend to go where the opportunities are most plentiful. The slow adoption of EMV card technology is another factor (which we also discussed in a recent post).

The adoption of EMV technology (albeit slow thus far) has, as predicted, caused some point-of-sale fraud to move to the card-not-present world. And as digital shopping increases (the Business Intelligence website forecasts that e-commerce will grow to $632 billion by 2020, up from $303 billion in 2014) and EMV adoption accelerates, fraudsters will continue to shift their focus toward e-commerce sites and opportunities.

Fraud’s most obvious cost is financial. Fraud cost U.S. retailers approximately $32 billion in 2014, up from $23 billion just one year earlier. And for the issuers of credit cards, last year fraud cost them approximately $9 per card issued. And fraud doesn’t just cost money, it eats away at a business’ reputation and in consumers’ confidence. Less confident consumers spend less. While only 6% of consumers will change to a different financial institution following a fraud incident, 30% of users will choose to pay with cash or with a different payment method.

Fortunately for Recurly customers, we offer industry-leading fraud fighting technology within our solution via our partnership with Kount. These tools can detect potentially fraudulent transactions, repair the problem when possible, or deny the transaction based on the factors that indicate a likelihood of fraud.

Want to learn more about how Recurly can help your business fight fraud? Talk to a Recurly expert at (844) 732-8759. Or schedule a demo below.

 

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