Ecommerce fraud is on the rise. In recent years, ecommerce fraud has risen twice as fast as the growth in ecommerce sales . Account takeovers and identity theft are currently the biggest fraud categories, but growth in newer categories like shipping fraud and billing fraud is also notable .
While account takeovers and identity theft continue to be the main drivers of fraud loss, totaling $5.1 billion in 2018 , the phenomenon of friendly fraud is on the rise. Friendly fraud, which results when a legitimate customer receives the good or service, but still files a chargeback, has risen 41% since 2011, and now makes up 86% of chargeback cases.
Your fraud review process is too costly
Worse still than the rise of friendly fraud are the “hidden costs” that come from rejecting good customers in pursuit of preventing losses. Today, more revenue is lost to these “false declines” than lost to actual fraud. Take a second to take that in. Rejecting good customers leads to a poor customer experience, and customers, annoyed or offended, often do not complete the sale. By Bolt’s estimates, retailers lose $4-5 on average for every dollar of chargebacks they lose upfront .