Covid-19: Enhancing Online Customer Experience While Fighting Fraud

There is already a lot of data that reveals that the coronavirus pandemic is impacting online shopping behavior. According to data from Adobe Analytics, which monitors the e-commerce transactions of 80 of the top 100 U.S. retailers, the fallout has led to the sudden purchase of many items not often bought online.

For example, Adobe finds e-commerce purchases of the virus protection category of products such as hand sanitizers, gloves, masks and antibacterial sprays have surged by 817 percent. Purchases for cold, cough and flu products have increased 198 percent, and online purchases for pain relievers increased 152 percent. Online purchases of toilet paper, food products and pantry staples are also up.

But these new purchase patterns also represent anomalies to many online merchants. And e-commerce is undergoing a dramatic shift as the virus spreads and more consumers turn to their computers to make purchases. This can also translate into more opportunity for fraudsters.

As merchants strive to both fulfill demand and mitigate fraud, how can they also keep customer experience seamless and pleasant? Card Not Present spoke with ClearSale’s vice president of U.S. Operations, Rafael Lourenco, who oversees ClearSale’s U.S. anti-fraud operation for his insights.

Here, he discusses what new online patterns are emerging in e-commerce amid the pandemic, how merchants can enhance their online experience with new customer experience strategies, and how online sellers must now adjust to the “new normal” of online shopping as the pandemic continues to unfold.

Card Not Present: How is customer service being impacted by the pandemic  amid new online shopping patterns? What are you observing and hearing about?

Rafael Lourenco: The crisis generated by Covid-19 is putting a strain on businesses across multiple industries.  When it comes to e-commerce, key areas of concern for merchants are order volumes, fulfillment, and customer service. While some verticals (such as grocery, pharmaceutical, and electronics) are seeing a higher intensity of orders, other sectors (such as travel and hospitality industries) have seen a drastic decline. For retailers in general, predictability is a key factor of success. Because many of them did not foresee such a radical shift in the market, they weren’t prepared for what was to come.

For many e-commerce merchants of household goods and consumables, dealing with these extreme spikes are reconfiguring their operations. For example, Amazon recently announced that it would be prioritizing household staples, medical supplies, and other high-demand products coming into its fulfillment centers and limiting stock of other types of products.  Naturally, a spike in household goods and consumables has impacted the supply chain, resulting in delivery delays. 

Meanwhile, merchants from other sectors are taking huge economic hits due to a volume of returns and reimbursements. A prime example of this is the travel and hospitality industry, which has had to reimburse customers for cancelled flights and tickets because of Covid-19 lockdowns. According to the International Air Transport Association, global airlines alone stand to lose $113 billion in sales. On the customer service side, these challenges mean that representatives are dealing with a slew of inquiries and complaints, and not every customer service team has the ability to scale in order to meet these demands.

We’ve also been hearing about a new trend in the type of inquiries and requests that customer service teams are receiving. For instance, consumers are asking reps whether specific items of interest come from China and refusing to complete the sale on orders if that is the case. Some are worried that the boxes could have the living virus on them and infect those who receive it, though the World Health Organization has refuted this claim.

Besides these external impacts, customer service teams are also dealing with challenges affecting their internal processes and practices. Traditionally, customer service is an in-office job. However, like many organizations, customer service teams have been forced to work from home. Providing teams with the necessary resources and tools for remote work is proving difficult. Most customer service reps work on office desktops, which they often share with other reps from different shifts. Moving office desktops to a rep's home isn’t ideal, and while the laptop rental industry has seen a boom, there is growing concern that the supply is quickly running low.

Businesses are also faced with information security challenges. Most of the systems related to customer service (CRMs, phone call voice-over IP software, etc.) have setup and configuration information security that doesn’t necessarily allow people to work from home and companies may have a hard time finding fast, scalable solutions for their software.

While customer service teams have various communication channels, including email, chat, etc., phone calls are still one of the most important ways for customers to reach merchants. The ability to make phone calls from home is being hindered, not only because reps may need software, but because they don’t have complete control over noise levels and other environmental factors. Employees also have to adapt to continuing any training programs via webinars and e-learning platforms.

As a result, some companies are thinking about partially outsourcing their customer service, while others might outsource it altogether.

What must merchants understand to ensure a seamless online experience for customers right now?  

Lourenco: Our experience working with merchants during peak sales dates (like the holiday season and Mother’s Day) tells us that customers are fairly understanding and can adjust their expectations during times like these, as long as merchants are transparent and proactive. This means updating your website to reflect new shipping times, being accessible to customers, and creating limits on essential items to ensure that as many customers as possible can purchase them.

We are seeing an increase in buyers who rarely if ever made purchases online previously. It’s so vital to ensure that you have good fraud protection solutions in place, not just to prevent fraudsters from taking advantage, but also to make sure that you aren’t declining good orders. This kind of peak in new purchasing behavior would be flagged for fraud, and many basic fraud systems would decline the order.

It’s important to remember that this time is highly stressful for a lot of individuals, so having an empathetic and positive stance for your brand is vital. Be transparent about your situation, and make sure you are communicating any delays or supply issues clearly. Make sure that customer service is ready and prepared to be understanding of complaints and do everything they can to meet the customer’s needs. While this is a difficult time, and you may see some losses in trying to appease upset customers, in the end, you may have gained a set of brand loyalists and evangelists who will be dedicated and worthwhile shoppers.

How can merchants enhance customer experience while also doing the best they can to mitigate fraud?

Lourenco: Customer experience (CX) and fraud prevention are much more interrelated than people might think. In order to discuss how CX can be enhanced while also mitigating fraud, I think it’s important to first describe how fraud prevention strategies impact CX.

Fraud prevention informs the data points that are required on website forms during the checkout process. A lot of fraud prevention teams require more data points, especially since mobile has become increasingly important and prevalent when it comes to online purchasing. In order to make the mobile experience a seamless one, payment forms are becoming streamlined and requiring less and less information. This limits the data points that fraud teams can use, which forces them to find alternative ways to fill in those gaps (such SMS, biometrics, etc.)

According to a report by CyberSource, more than 80 percent of merchants selling online have some sort of manual review process. Retailers experiencing a high volume of orders right now, who use manual review as part of their fraud prevention plan, will likely take longer to get through all the orders. And because manual review is typically an in-office job, getting through orders will prove more challenging for e-commerce businesses. Additionally, we will likely see an increase in teams having more interactions with customers to verify transactions. All of these factors effect delivery times of good orders.

A chargeback, or demand for a retailer to make good on the loss of a fraudulent or disputed transaction, also influences the customer experience. E-commerce merchants selling digital goods will end up paying an average $3.29 for each dollar of fraud. Moreover, chargebacks can leave a bad impression on the card holder, which decreases the likelihood that they’ll ever shop with the brand again. If the customer complains online about their experience, it can also damage the brand’s reputation.

Ideally fraud detection tools approve customer orders and block fraud attempts, however, when fraud prevention strategies are not well defined, fraud filters can block an entirely legitimate order. This is what we call “false declines”. False declines can have a compounding effect on a business. More than 60 percent of customers say that if they are declined on an online channel, they will no longer shop on the site or at least reduce the frequency at which they shop with the online store. Declining a good customer is the worst thing you can do. So how can you mitigate this kind of fraud?

Here are some tips:

  • Understand Why Declines Occur - Many systems will prevent certain purchases automatically, such as first-time visitors making exceptionally large orders or orders that originate in certain countries. You know your customers best. Is this kind of behavior suspicious to you? If not, optimize your system to increase the success rate of future transactions.
  • Reject Transactions Based on Data, Not Assumptions - Wholesale generalizations (“all orders from China are frauds,” “customers will never want to ship to multiple addresses”) are rarely based in fact. Make sure you’re making decisions based on data, not instinct. If you feel you don’t understand the data, a fraud protection partner can help.
  • Contact Customers Directly - A questionable transaction may be an opportunity to forge a lasting relationship with a customer. Most people appreciate the chance to explain themselves rather than being rejected outright. Before flagging a transaction, contact your customer immediately to verify the transaction details. Your customer will appreciate that you’re looking out for them.
  • Rely on Technology - Advances in fraud-detection technology are made every year. The latest services use artificial intelligence and machine learning to process transactions quickly, recognizing patterns or triggers that indicate potential threats. However, artificial intelligence still has a long way to go before it can match the fraud-detection capabilities of the human mind. People are unpredictable.
  • Review Transactions Manually - Performing manual reviews will help you flag genuinely fraudulent orders, approve more legitimate purchases, learn to distinguish between the two, and improve the accuracy of future reviews. But it can also be time-consuming and labor-intensive. Compounding the issue, most in-house screening teams don’t even know what they’re missing. Less than 30 percent of companies track false positives, and 42 percent don’t know their false positive rate. The best approach to reducing false declines is combining the best of both worlds, the efficiency of automated machine learning systems with the precision and mental flexibility of expert human teams.

What do you think has changed in e-commerce in the age of Covid-19? 

Lourenco: Order volumes have a direct impact on rules and algorithms and, like I mentioned earlier, some retailers have had huge spikes in order volumes. Velocity checks help merchants monitor repeated patterns occurring during a specific time frame and typically velocity filters can help prevent fraudsters that are testing stolen credit card numbers.

Given the lockdowns, many people who have never or rarely made online purchases are moving online and the reality is that some of those rules and variables are being misled and concluding some orders as risky when they are not. For instance, we’ve seen customers stock up on toilet paper, often making multiple purchases in a short time frame. Before, we would have thought of these purchasing patterns to be strange, but it is the new norm. Volume increases behave similar to other sales peaks, whereas before you might have had 2 percent in fraud attempts in a day, now you might have 1 percent. A decrease in average risk affects how rules and thresholds behave in fraud prevention systems. 

Even so, we are also seeing a tremendous increase in fraud attempts. Criminals are using public interest in coronavirus to build more phishing and malware sites than ever. Google’s Safe Browsing detected a radical peak in malware and phishing websites from February 2 through February 23, 2020. Phishing websites and malwares are acquiring personal data (including, but not limited to, credit card information) that are used in "identity theft" crimes, CNP fraud included.

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