Fraud screening comes with the territory when you are an e-commerce operator. There is too much at stake to let orders go out the door without first confirming their veracity. But a practice designed to protect retailers can also harm them. Simply put, fraud screening is a double-edged sword.
E-commerce operators who sell overseas need to put a lot more effort into fraud screening due to international trade regulations. But even operators whose goods never leave the country still practice fraud screening to protect themselves. When screening reveals a fraudulent transaction, the retailer saves money. But what if screening turns up a false positive, so to speak?
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Customers Aren’t Too Pleased
Imagine you are looking to buy something online. You spend a considerable amount of time shopping, comparing prices, and checking out shipping options. You finally settle on your purchases and fill your cart. Upon completing checkout, you discover your order is rejected due to fraud concerns. What is your reaction to that?
Survey data from June 2022 shows that customers aren’t too pleased when their orders are mistakenly rejected. Approximately 40% said they would no longer do business with online stores after having an order falsely rejected. Even worse, 34% said they would share negative comments about their experiences on social media.
Think about that for just a minute. Not only are customers willing to stop doing business with a company that declines an order, but they would also tell others to follow their lead. That is a surefire way to destroy a whole bunch of loyalty built up over many years of doing business.
International Fraud Screening
It is not clear whether international customers would have the same reaction to an order being declined. But human beings are what they are. It wouldn’t be surprising to see a consistent attitude among consumers in every country. Still, e-commerce operators need to be extra vigilant about shipping overseas.
Texas-based Preferred Shipping, experts on ecommerce international shipping explain that exporters have multiple responsibilities in terms of fraud screening. For their own protection, they need to make sure that they actually get paid for the goods sold. They also need to verify they aren’t selling to people or organizations on any of the restricted entities lists. Finally, they must be sure they are not shipping to a receiver with potentially illegal intentions.
International shippers face a lot more risk in terms of fraud screening. So for them, declining an order every now and again probably isn’t the end of the world. They expect a certain number of fraud-related rejections. Still, they do risk damaging their reputations when orders are falsely declined.
They Do Their Best
E-commerce operators can only do their best to practice responsible fraud screening. Sometimes it seems like they need to let the chips fall where they may. Unfortunately, it is part of the e-commerce game at a time in history when fraud seems so easy to perpetrate.
Perhaps future technology will automate a large portion of fraud screening. Maybe automated screening will catch more legitimate fraudsters and reduce the number of false declines. No doubt e-commerce operators would welcome such technological advances. In the meantime, they need to make do with what is currently available.
The good news is that artificial intelligence is on the way. Software developers are working with the logistics and financial services industries to come up with fraud protection systems for e-commerce. By leveraging artificial intelligence and deep learning, they hope to create algorithms that take all the guesswork out of fraud screening. Let’s hope they succeed. Fraud screening is a double-edged sword that, at the moment, can cut both ways.
