For Chief Financial Officers (CFO) of online merchants, payments fraud is the number one risk to their business.
This is according to fraud prevention platform Ravelin, which recently polled nearly two thousand e-commerce leaders from merchants across 10 countries, including CFOs, CTOs, Chief Risk Officers, and fraud and payments managers, on their biggest challenges today.
Online payment fraud is a major challenge for 54% of the respondents, followed by account takeover (50%), returns and refunds abuse (52%), and promotions abuse (52%). To tackle the problem, most finance leaders expect to grow their fraud teams this year; in fact, a third of the respondents believe their fraud teams could grow by a fifth in the coming months.
Fraud as a service
This year, CFOs can’t just pay attention to “classic” criminals - people who are out there actively looking to commit acts of fraud, identity theft and the like. The rise of the “criminal customer” and “professional organized fraudster” has been “dramatic” this year too, according to the report.
The “criminal customer” is often engaged in what’s called “friendly fraud”, where they abuse returns, promotions, and various company policies. One of the schemes they’re increasingly abusing is buy-now-pay-later, it was found.
Most respondents believe otherwise honest customers turned to scams due to the significant rise in the cost of living. This trend is especially accentuated among the younger customers, Ravelin says.
Citing a separate study by fraud agency CIFAS, the company says one in seven digitally-savvy 16-34 year-olds admitted to being involved in some form of first-party fraud.
More than half (57%) of CFOs claim to have seen sophisticated “fraud as a service” in action. According to the respondents, there are organized groups out there buying items using stolen credit cards, and then reselling them to customers who are oblivious to how the items were originally obtained.
“CFOs at online businesses, who have overall responsibility for fraud, tell us fraud from organized criminals remains a perpetual thorn in their side,” commented Ravelin CEO Martin Sweeney. “But fraud by their own customers runs close behind. They recognize the vast majority of internet shoppers are scrupulously honest, but recognize they need to be increasingly vigilant for those who are not.”
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