eCommerce fraud prevention software helps online merchants and eCommerce business owners identify suspicious activities and evaluate risk scores in order to minimize and protect against online fraud.
Also referred to as eCommerce fraud detection and protection software, these fraud solutions are designed to help reduce the exposure of eCommerce businesses to fraudulent orders and credit card payments by implementing algorithm-based analysis, allowing the system to automatically and efficiently evaluate the potential for fraud within each transaction. Fraud protection is particularly vital for online store owners and eCommerce companies as they are very susceptible to multiple fraud attempts every single day, especially when orders and other transactions are conducted on unsecured websites, networks and smartphones or other mobile devices.
eCommerce fraud prevention tools work by analyzing relevant data from a wide variety of sources prior to either approving or rejecting specific online transactions. The software solution is designed to quickly identify anomalies and avoid potential chargebacks and lost revenue by effectively separating the good orders from the anomalous ones, as well as preventing a false positive analysis result. The main objective of using this type of software is to provide the best customer experience possible and not treat your good customers like criminals when buying and transacting with your website. A good eCommerce fraud prevention solution often integrates with different third-party applications such as web security software, shopping cart software and eCommerce platforms.
eCommerce fraud prevention software empowers online retailers and merchants to either accept or reject payments through automation and machine learning, effectively reducing the risk of fraudulent transactions and chargebacks. The software offers the ability to record user and transaction information, which is not only useful for fraud prevention but also for chargeback disputes, return fraud and friendly fraud.
The same fraud protection software is also capable of preventing account takeovers, which is a type of eCommerce fraud that involves phishing, by implementing better authentication security. Fraud detection and prevention solutions give eCommerce businesses the ability to manage and avoid high-risk or fraudulent online transactions in a more effective and convenient way.
In order to eliminate or at least reduce the need for time-consuming manual review process, eCommerce fraud prevention software can automatically and continuously keep track of multiple metrics like customer orders, financial transactions, user behavior and devices. This approach allows the system to effectively assess and calculate risk scores in order to detect suspicious and potentially fraudulent activities like bot clicks, illicit product orders, etc.
Most eCommerce fraud prevention tools are equipped with an automated workflow feature, which works by automating a variety of key processes such as sending order details, checking payment fraud, fulfilling good purchase orders, blocking suspicious devices and canceling suspicious or fraudulent orders. Through automation, online merchants can efficiently handle even high volume orders, quickly and securely.
A chargeback guarantee is a feature as well as a contractual obligation on the part of the eCommerce fraud prevention software. It is a promise made by the software provider or vendor to cover the cost of any chargebacks received by the online merchant while using their fraud detection and protection platform. Many online store owners and eCommerce businesses looking for a fraud prevention solution will want to go with one that offers chargeback guarantees. This way, they won’t have to cover the chargeback costs themselves.
Device fingerprinting, also known as device identification, is a fraud prevention strategy that involves recording or capturing unique data about the device used by the customer to shop for products and complete their online transactions. This approach collects and analyzes a wide variety of data points, such as the type of operating system that the device runs on, the type of browser used during checkout and the language options installed and used by the shopper. The data that is recorded by the system is then utilized for risk assessment in order to identify fraudulent users and activities.
A good use case for device fingerprinting would be dealing with a customer who’s claiming to be from a certain country. If their country’s national language is not installed in the device they’re using, for instance, then that could indicate that they are probably using a virtual private network (VPN) in an effort to hide their true geographic location.
Artificial intelligence (AI) and machine learning (ML) are two of the biggest and most relevant trends in eCommerce fraud prevention software solutions. Many of today’s top fraud detection and protection systems are equipped with machine learning technology. Users can leverage real-time insights to feed their machine learning models, which allows for quicker and more complicated calculations throughout a wider range of online fraud indicators or signals. This is way more efficient and practical when compared to the traditional manual review process.
An insights dashboard is perhaps the most basic feature in any eCommerce fraud prevention platform, as it is responsible for providing relevant fraud prevention information, displayed in a way that makes it easier for users to understand. Insight dashboards are designed to present detailed yet easily digestible analysis and reports, capable of displaying algorithmic conclusions and highlighting suspicious activities through a centralized, user-friendly interface. This feature eliminates the need for multiple view windows to access all the relevant data pertaining to fraud prevention.
Multi-platform support is also a crucial feature in eCommerce fraud prevention software. eCommerce fraud solutions are not what you might consider a one-size-fits-all type of software service. This is mainly because the different feature sets, capabilities and offerings don’t always fit the target audience, meaning the size and scale of the eCommerce business can dictate the type of fraud detection and protection system they require. Fraud solutions will often have a particular list of supported platforms or application programming interfaces (APIs) that they can easily integrate with to make fraud detection and prevention that much easier even for smaller online store owners and merchants.
eCommerce fraud prevention software keeps track of all online transactions handled by the eCommerce business on a daily basis and then it designates risk scores to each individual transaction. The transactions with attributes that don’t deviate or are consistent with the data on record are considered good orders and are allowed for processing. Suspicious transactions, on the other hand, are automatically denied to move forward for processing. The system will then send an alert to the user for further evaluation.
One of the biggest benefits of implementing the right eCommerce fraud prevention solution is how it enables real-time transaction screening and review automation. eCommerce fraud solutions with machine learning capabilities can continuously monitor incoming data. They allow real-time data processing, which means users don’t even have to review most of the customer orders themselves since the system will do it for them, more quickly and efficiently. This provides a game-changing advantage to eCommerce businesses, especially when it comes to operational efficiency, cost control and customer experience.
Good eCommerce fraud prevention software also provides deeper insights into user behavior. Through machine learning, eCommerce fraud solutions can easily detect the hidden correlations between user behavior and the potential for abuse and fraudulent activity. Unlike rules-based fraud detection solutions, ML-based systems have the capacity to learn from the data that is fed or streamed to them on a consistent basis. The software can use this data to adapt and identify emerging patterns related to fraud or any suspicious activity.
Real-time reporting and operations tracking is also a significant benefit of using the appropriate eCommerce fraud detection and protection software. Fraud detection systems are equipped with clean and centralized dashboards, which allow users to easily monitor their key performance indicators (KPIs) in real time. For example, users can easily track customer orders and learn about the status of those transactions; i.e., whether they’ve been approved or declined. Through the dashboard, users will also have access to additional information such as the customer’s location, the payment method they’ve chosen, the channel, etc.
In addition to real-time reporting, many eCommerce fraud prevention software solutions will also provide daily, weekly and/or monthly reports, covering all suspicious activities that have occurred during a chosen period of time as well as the total number of approved and rejected transactions. Fraud investigation teams and professionals conducting manual reviews can also benefit from this function as they can leverage key visualizations to represent trends and fraud patterns in order to get a better understanding of the connections between the detected fraud attempts and user behavior.
eCommerce fraud prevention software is a complex yet very important solution for online store owners and merchants. It helps them to effectively detect fraudulent activities and transactions that will put their operation at risk of serious legal and financial problems that will undoubtedly affect their revenue in a negative way. This type of software solution will not only detect fraudulent activities, but also put a stop to them using a wide variety of tools and technologies, such as artificial intelligence and machine learning.
A good fraud prevention tool should be able to adapt to your growing requirements and not give your customers a hard time buying your products and making payment. It should be robust enough to stop fraudulent activities, but capable enough to separate good orders from the bad ones. When evaluating the different fraud prevention tools in the market, remember to take advantage of the free trial to get to know the product.