New U.S. and European data released by Riskified reveals a stark disconnect between retailers and shoppers on the matter of online shopping fraud.
The research, which comprised 4,000 consumers and 400 retailers across the U.S., UK, France and Germany highlights how widespread online retail fraud is, the extent of its enduring financial impact and how it’s perceived in the eyes of shoppers versus retailers.
In the U.S., more than three quarters (82%) of retailers said that they have seen an increase in fraud attempts since the pandemic began, with promo abuse having the most significant negative impact (46%) on revenues followed by Account Takeovers (43%). The impact of fraud on retailers’ bottom lines is severe, with 26% of global retailers saying that fraud is significantly damaging their profitability. Worse still, over one-third (34%) of international retailers said they had lost between 5% and 10% of their eCommerce revenue to fraud in 2020.
A confidence gap between retailers and consumers globally was also unearthed, with more than half (55%) of all retailers stating that they were confident in their ability to prevent eCommerce related fraud, despite only 34% of consumers trusting in retailers’ ability to avoid said fraud. In the U.S. specifically, a third (33%) of online consumers said their concerns over online shopping continues to grow, and just under half (45%) of consumers believe that retailers will find it even harder to prevent fraud over the next year.
The long-term brand impact was a prominent factor for consumer confidence in online shopping too. Not only did 40% of U.S. consumers say they would blame the retailer if their account were compromised, but as many as 66% said they wouldn’t buy online again from a shop where their
account was compromised.
When it comes to fraud prevention, two-factor authentication was recognized by respondents as the most effective tool. However, it was also ranked as the most damaging to revenue for the U.K. and French retailers, and the second most damaging for U.S. and German retailers. This can be attributed to the friction it can add to customer experience. The use of new technologies to smooth the payment process and reduce fraud is becoming more prevalent as well.
“It’s no surprise that the rapid growth of eCommerce has also led to a rise in eCommerce fraud, and as our research shows, the impact is significant for both merchants and consumers,” said Peter Elmgren, Chief Revenue Officer at Riskified. “Fraud presents unique challenges for retailers who want to protect their businesses while also delivering a seamless and safe experience for shoppers.”
The full Crisis of Confidence report from Riskified can be found here.