Fraud has always been a problem for online retailers, but since the introduction of more secure credit cards in the last few years, much offline retail fraud has moved online. Magento retailers can’t afford to ignore the ever-present risk of fraud, whether it’s the dedicated efforts of criminals gangs with stolen identities or the less predictable casual fraudster who orders products with every intention of initiating a chargeback and keeping the goods.
Fraud prevention is both time and labor intensive, especially for larger eCommerce stores. It’s challenging to check every one of thousands of orders for fraud. And, as I know from personal experience, it’s all too easy to generate false positives and lose a genuine sale.
Last year, I ordered some furniture from a well-known retailer and apparently triggered their internal fraud prevention system. The issue wasn’t handled well, and by the time my order had been freed from the dungeon of manual review, the products I wanted were out of stock.
It’s a hard balance to strike: too strict and false positives eat into profits, too lax and those profits go to fraudsters. eCommerce merchants don’t want to give shoppers a bad experience — no one likes being accused of fraud — but nor do they want to lose money.
Unfortunately, we aren’t yet at a point where fraud prevention can be entirely automated. There’s no replacement for an eCommerce retailer who intuitively knows when a transaction is likely to be false based on extensive knowledge of the customer base and their order patterns.
Although a manual review of Magento eCommerce sales is here to stay, automation can significantly reduce the work involved, green-lighting genuine purchases and blacklisting fraudulent purchases according to the Magento eCommerce retailer’s policies, and passing uncertain orders to a manual review team.
There are several excellent fraud prevention automation tools that integrate well with Magento.
Signifyd, which provides a Magento extension for Magento 1.X, is one of the leading lights in the field of eCommerce fraud prevention. Its platform carries out an extensive series of verification checks on every order, using a combination of machine learning and human analysis.
One of the most interesting features of Signifyd is how it stands by its decisions. When the service approves an order as genuine, it will refund you the lost revenue if it turns out to be fraudulent. That means Magento retailers don’t pay the cost of chargebacks.
The service isn’t free, so individual retailers should compare the cost of using Signifyd to the cost of fraud for their business and make the appropriate decision.
FraudLabs Pro Fraud Prevention
FraudLabs, which provides Magento integration for Magento 2.x, has been in the fraud prevention industry for more than a decade. The free extension is easy to setup, and once installed FraudLabs will run every order through a wide variety of checks including fraud analysis and scoring, IP Geolocation, email address validation, and a custom set of rules, among others.
Orders are categorized as “approved”, “rejected”, and “pending review”, reducing the amount of manual order validation required.
FraudLabs is free for up to 500 transactions, making it ideal for smaller eCommerce stores that want to dip a toe in automatic Magento fraud prevention.Posted in: Magento