Is Being Too Cautious About Fraud Costing You Money?
February 27, 2018
Fraud losses are on the rise, reaching an average of 8 percent of revenue for eCommerce retailers, up from 7.6 percent a year ago, Chain Store Age reports. Frequent and large data breaches, such as the Equifax breach announced in September 2017, leave fraudsters with a vast store of the information they need to fuel their criminal pursuits.
But it turns out that, digital retailers are often their own worst enemies when it comes to fraud losses. While fraud costs and chargebacks hurt, the bigger hit to the bottom line comes from false declines—legitimate orders that retailers don't ship because they’re incorrectly flagged as fraudulent.
Business Insider found that last year U.S. eCommerce merchants lost $8.6 billion by mistakenly holding back legitimate orders for fear of fraud. Forrester Consulting, in a study commissioned by Signifyd, a Magento Partner that provides fraud protection, found that a major retailer realized $3.2 million in revenue over three years by reducing its false declines with Signifyd’s Guaranteed Fraud Protection. And the fraud-cost savings for the retailer? $2.7 million—half a million less than the cost of false declines.
Those figures might not even tell the whole story. Lee Hadsock, Head of Partner Development at Signifyd, has taken to referring to false declines as the "insult rate." When you turn down a good customer with a legitimate order, you lose that order. And you might well lose that customer. "I can't really think of a much worse customer experience than getting the buyer all the way to check out and then you don't let them complete the purchase," Hadsock says. "There's a 50-50 chance they'll never come back."
A Better Way
Fortunately for Magento customers, there is a better way. Signifyd's fraud prevention system is now natively integrated into the Magento eCommerce platforms, providing an instant solution to a growing problem. With Signifyd’s machine-learning fraud protection, retailers can evaluate thousands of orders in seconds, quickly sorting safe orders from fraudulent, and possibly-fraudulent, orders. This means fewer orders are held up and less human review is needed. And, Signifyd's 100 percent financial guarantee on all approved orders means merchants can ship more orders without worry about whether those orders are fraudulent.
Alligator Performance, a Magento user that sells high-performance auto parts, was struggling with false declines before deploying Signifyd’s fraud protection solution. After implementing Signifyd, the Idaho-based merchant increased its accepted orders by 20 percent. According to Alligator Performance General Manager Jason Kuenkler, those were orders “that we would not have had before because we would have been watching closer and we wouldn't have accepted those orders without the level of detail that Signifyd is supplying."
A Powerful Combination
Together, Magento and Signifyd create a powerful combination that frees retailers to focus on growing their business to business companies and serving their customers. Magento provides merchants with an agile and open platform on which to build beautiful and engaging sites that work across channels and devices. And Signifyd's machine-learning fraud protection on the back end takes away the stress of fraud and false declines while helping to automate a merchant's fulfillment for faster delivery.
About Mike Cassidy and Signifyd
Mike Cassidy is Signifyd's lead storyteller. Contact him at firstname.lastname@example.org and follow him on Twitter at @mikecassidy. Signifyd is a Magento partner that solves the problems of chargeback losses, mistaken declines, and tedious transaction review with a full financial guarantee on approved orders. Signifyd is in use by multiple companies on the Fortune 1000 and Internet Retailer Top 500 lists. Signifyd is headquartered in San Jose, CA.