Fraud prevention platforms are adjusting as the dust from the big digital shift settles, and one of the key takeaways from this activity is that stopping fraud and knowing your customer often goes hand in hand, helping merchants prevent cyber theft and strengthen ties with consumers.
In a conversation with PYMNTS, Marina Moraes, Vice President of Riskified, explained how the e-commerce pandemic outbreak has pushed consumers online, where they are very happy to shop – provided they feel protected against fraudsters and appreciated by merchants.
And customers expect great service no matter what channel they buy from, she said.
“We find that many consumers report prioritizing convenience over price when selecting an online retailer,” Moraes said. “Merchants must respond by innovating and finding new ways to connect with their consumers to increase customer lifetime value.”
Digging deeper into the changing expectations consumers have of the retailers they frequent, Moraes told PYMNTS that three core competencies are essential for building loyalty.
Seamless and personalized experiences are at the top of the list, as customers want to feel like merchants are rewarding their loyalty by understanding their preferences.
The second core competency is convenience. It’s about transacting across multiple platforms and channels, seeing their preferred payment method at checkout, “and being able to see their transaction history, whether it’s their past returns , their past refunds, tracking or shipping,” Moraes said. .
Speed is also very important. “They want to do business at the speed of light. They want to find what they are looking for very quickly. They want instant access to reviews, FAQs, and they want their questions answered quickly, whether through a chat bot or another customer service line. And they want their products fast. It’s the Amazon effect,” she said.
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Don’t mess with confidence
As the novelty of e-commerce fades and online shopping is now seen as “shopping” in a (mostly) post-pandemic world, consumers are more sensitive than ever to personal data.
With nearly a quarter of consumers saying in a recent PYMNTS study that data theft would harm – and likely end – a retail relationship, now is the time to take comfort in security.
“It keeps me awake at night. That’s why I’m in business,” Moraes said. “If customers don’t believe you’re protecting their data, they’ll shop elsewhere. What really interested me is that buyers are actually nervous about the risk of fraud. »
An internal study by Riskified found that 50% of retailers think their anti-fraud measures are effective, compared to a significantly lower number of consumers (34%) who think so.
“This gap is huge,” she said, adding that losing consumer trust actually costs multiple consumers without the merchant realizing why. As Moraes explained, “We also found that 65% of consumers would stop buying from a store where their data was compromised, and 30% would tell family and friends to do the same.” .
What is the fix? Data security systems and identity verification are very important, but the smartest decision in 2022 is to manage data collection and storage by doing less.
She said: “There are ways to protect consumer data and privacy so that shoppers are not deterred from spending money with individual merchants. One is to collect only the data needed to improve a shopping experience. There’s a lot of data that you probably don’t need.
Additionally, she said, “merchants should not store credit card information or other sensitive data on online servers. It is good practice to use offline storage and also treat personally identifiable information (PII) as the organization’s most critical data.
This means that PII must be encrypted at rest and in transit.
“It should be behind a firewall, and also, isolate all sensitive data from personal data, so that access to consumer details has minimal benefit to the fraudster stealing it,” Moraes noted.
To this, Moraes underscored the importance of early detection, saying, “it is not enough to detect suspicious activity as it happens. It is very important to take preventative measures to reduce fraud and risk, such as implementing an end-to-end scalable fraud prevention solution.
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Flavors of fraud
While there is a risk for retailers in returns and refunds, again these policies should favor the customer so that they in turn feel valued by the retailer. Getting it right can go a long way.
Using herself as an example, Moraes said, “I am a frequent return and refund, although I keep most of what I receive. But my lifetime value is greater than the cost I create for these companies. Even the National Retail Federation has stated that your best buyers are often the ones with the most returns.
Noting that a friendly return policy gives consumers the confidence to make purchases, she said the flip side is that “about a third of online consumers have abandoned their purchases before checking out after having determined that they were not satisfied with [return/refund] Strategies.”
To avoid this fate, Moraes suggests favorable return policies, free or tiered return shipping, wide return windows, and convenient return methods. “Usually when a consumer is unhappy, the ‘no questions asked’ policy also goes a long way,” she said.
Either way, the bad guys have yet to be unearthed. In this context, this refers to so-called “friendly fraud”, which is another way of saying that not all customers do the right thing, and this should also be taken into account in refund policies. and back.
Citing a Merchant Risk Council finding that 75% of merchants saw an increase in the volume of policy abuse from 2019 to 2021, Moraes said, “Merchants need to find the right amount of friction to apply to keep fraudsters at bay. . It is very difficult, but there are technologies, there are resources to help merchants detect this unwanted behavior and really know who is on the other side of this transaction.
In this confusing mix, Moraes recommends being transparent with your customers “and acting quickly when incidents occur, remind them to change their passwords frequently, have a good escalation process in place…and be sure to give trust, security/risk teams and anti-fraud teams a seat at the table.
This reduces merchant risk, leads to more affable policies and earns consumer trust, loyalty and lifetime value, she said.