Don’t Let Online Fraud Derail Your Customer Experience

Online fashion retailers can prevent fraud without harming conversion, customer experience and customer retention.

From CNP fraud to wardrobing, online fashion retailers face a lot of fraud challenges. Despite fashion’s status as a popular target for cyberscammers, many executives I’ve met over the past decade see fraud prevention as a technical issue, not on the same level with big goals like conversions and lifetime customer value gains.

I respect that perspective and understand that fraud isn’t always the top challenge for retailers. But I also believe fraud prevention affects those primary goals in ways that should be factored into high-level planning.

If you’re angling to learn more about this issue and how to solve it, stay with us!

Online fashion retailers face a surge in fraud

In the competitive fashion industry, the most successful brands maximize customer lifetime value and earn revenues that are greater than expenses. Fraud prevention can help retailers achieve both these goals, although the most obvious one is protecting revenue.

As fraud attacks on online fashion stores rise, as they did by 47% in 2018, fraud prevention has a critical role in revenue protection. For online retailers in general, fraud losses as a portion of annual revenue rose by nearly 14% in 2018 to 1.8% of revenues, according to the LexisNexis True Cost of Fraud Survey.

For a growth-focused executive, these figures could look like reasons to rev up revenue generation and improve customer experience, while leaving fraud management to do what it’s always done. However, fraud management can undermine those goals if it’s not done properly.

All fraud-prevention tools and technology boil down to the fact that the way to prevent fraud is to decline bad orders. The problem is that at least some order-screening mistakes will be made, because no process or analyst is perfect. The consequences of order approval mistakes can be expensive and long-lasting.

False positives cost much more than completed fraud

Controlling fraud is critical, but so is keeping good orders out of the anti-fraud net. False declines cost an estimated $331 billion in 2018 alone. That is a very large figure compared to the $130 billion merchants are expected to lose to CNP fraud between now and 2023.

False declines can destroy customer relationships.

With each false decline, you lose a sale.

You may also lose that customer’s future business, plus all the money you spent getting them to convert in the first place. More than 6 out of 10 consumers say they shop elsewhere after one bad experience with retailer. If they complain on social media, that can make it harder to acquire new customers, too. All this from a fraud decision.

Order review is part of CX, too

One way to reduce false declines and keep your customers is to manually review flagged orders instead of automatically declining them. And manual review affects the customer experience, too.

One CX challenge is time. Customers expect immediate approval for their orders. Delays can push them to contact customer service or even cancel the purchase. Retailers must have enough reviewers in house or available from a third-party service to handle sales peaks, so customers don’t get antsy.
Speed is critical, but so is gathering information to make a good decision, especially on high ticket value orders. When analysts need to call customers to verify an order, it’s a critical touchpoint.

A skilled analyst frames the conversation as protecting the customer from fraud and ensuring the accuracy of their order. This type of outreach can strengthen relationships with good customers while weeding out fraud.

In less-skilled hands, contact with a fraud analyst can leave the customer angry or embarrassed. They probably won’t shop with you again even if their order is approved. Once again, fraud prevention can make or break the customer experience.

The online fashion space is incredibly competitive, and effective fraud management can provide unexpected advantages. As the costs of fraud, false declines, and poor customer service rise, it’s important to see how good fraud prevention can improve CX and protect your bottom line.
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Rafael Lourenco is Executive Vice President at  ClearSale, a card-not-present fraud prevention operation that helps retailers increase sales and eliminate chargebacks before they happen. The company’s proprietary technology and in-house staff of seasoned analysts provide an end-to-end outsourced fraud detection solution for online retailers to achieve industry-high approval rates while virtually eliminating false positives. Follow on twitter at  @ClearSaleUS  or  visit 

 Watch the Rafael’s  Redcarpet Interview & the Panel Marketplace, E-commerce, Digital Platform: Technologies in Fashion Connecting Businesses Online and Offline, at Fashinnovation’s website Content Section & YouTube Channel.

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