It isn’t just the growth of e-commerce that has led to a rise in attempted fraudulent chargeback disputes.
As retailers attempt to eliminate points of friction within the online retail experience, many are now giving way to a treasure trove of consumer information all streamlined under one account—further complicating the fraud protection process and leaving merchants more susceptible to additional fraud attempts like wide-scale account takeovers.
“Every retailer is trying to move away from guest checkout. They want that recurring loyal relationship with the shoppers, and that puts a lot of emphasis on the account layer,” said Indy Guha, chief business officer at Signifyd. “Everybody wants their mini version of Amazon Prime, so they’re stapling private flash sales, loyalty programs, points and store premium credentials for fast checkout, all into that account layer. If you flip your worldview to a black hat fraudster’s perspective, that’s a gold mine.”
Giving bad actors more tools at their fingertips can be devastating to a retailer’s bottom line. But the problem has gone far beyond that—in the efforts to fight fraudster-driven chargebacks and other criminal behaviors, they’re turning away genuine, honest customers that otherwise would have converted on their site.
Guha estimates that within 5 percent to 15 percent of honest transactions get declined in the e-commerce checkout and payments processes.
“Everybody’s overcorrecting for the fear of fraud,” Guha told Sourcing Journal at the Shoptalk conference in Las Vegas. “As you hit this period of economic volatility, you cannot as a retailer, afford to turn away good revenue that you spend marketing dollars acquiring, and that you spend digital experience dollars bringing through your site all the way through the purchase. In the physical store, if you had somebody at the checkout register pulling one in 10 people out of line randomly, that would not be acceptable. But that’s the state of e-commerce.”
Signifyd’s Commerce Protection Platform is built to use transaction intelligence from thousands of merchants globally to sift fraudulent from legitimate orders—simultaneously protecting the enterprise from risk while increasing the number of legitimate orders that are fulfilled. According to the firm’s before-and-after analysis of a sampling of merchants that have deployed the Commerce Protection Platform, Signifyd said its tech increases order approvals by an average of 5 percent to 9 percent.
The company’s machine learning model is designed to adjust to newer tactics and techniques deployed by professional scammers and fraud networks, and can also detect cases of policy abuse and provide a financial guarantee on approved orders against all types of chargebacks.
In March, Signifyd hit a major milestone, revealing that the company had achieved Platinum Partner status in the Adobe Technology Partner Program for Experience Cloud. With the partnership, it is now the only fraud protection solution in the tier to offer guaranteed chargeback protection to brands leveraging Adobe’s suite of commerce solutions.
While Adobe has “thousands” of tech partners that integrate within its Experience Cloud, according to Jason Knell, senior director of commerce services at Adobe, fewer than 20 overall companies have made Platinum Partner status.
The combination of the two technologies is designed to provide online brands with a platform that can assist their digital experience needs from discovery and site experience to checkout, fulfillment and post-purchase support.
Guha said the partnership is even more valuable to sectors like apparel and footwear, where he notes more retailers are trying to tap into engagement innovation methods such as flash sales and limited-edition sneaker runs and influencer collaborations. These attempts to drive loyalty can put brands in a dangerous spot if they don’t have technology capable of handling rapid fluctuations in spending.
“You go from zero volume to a massive order spike back to zero volume in days. There’s no amount of manual process that can keep up with that,” Guha said. “You need to be able to instantly parse who’s a fraudster, and who’s an unauthorized reseller trying to buy a $300 sneaker and resell them for $1,500. All of that intelligence is necessary to support a flash sales model, especially on retailers that historically couldn’t do it.”
The volume of fraudulent orders placed on Signifyd’s Commerce Network of merchants increased by 34 percent last year, the company said in its State of Fraud report launched in January. Bot attacks on e-commerce sites increased by 71 percent in 2022, the firm’s data shows.
As the Signifyd platform continues to monitor and protect retailers against more fraud attempts, Guha remains bullish on the overall integration of e-commerce features as a means to reduce shopping friction.
“I think the linkage between the account layer and payments and checkout is only going to increase, and I think that’s good for the industry,” Guha said. “I think every chief digital officer wants to incentivize loyalty. Eliminating guest checkout, if you can get there as an industry, means you actually get to know your customer, and you get more insight into their journey through your product assortment.”