According to U.S. Census Bureau data, eCommerce sales climbed to a record high of $453.5 billion in 2017, representing a 16% increase over the previous year. However, recent Experian reports revealed that online shopping fraud rose 30% year over year, and 63% of businesses acknowledge they are experiencing the same or more fraud than a year ago.

Chargebacks911 (, a dispute mitigation and loss prevention firm, warns that rising card-not-present (CNP) fraud could offset revenue gains unless merchants take proactive steps to identify, prevent and control it. Though the U.S. transition to EMV technology has helped reduce point-of-sale (POS) card fraud, CNP fraud has continued to escalate. 

Javelin Strategy & Research projected that POS losses would decline from $6 billion to just under $5 billion between 2014 and 2018, while CNP losses were expected to almost double over the same period—from $10 billion to nearly $19 billion. Another Javelin study found that identity fraud claimed a record 16.7 million victims in 2017, with CNP fraud proving to be 81% more likely than POS fraud.

Meanwhile, Experian’s research reflected the challenges merchants face in trying to manage that fraud: 72% of businesses cite fraud as a growing concern, 71% admit to denying more transactions than they should, and 84% believe the need for fraud risk mitigation could be reduced if they were certain of customers’ identity.(3) Merchants are also getting mixed messages from consumers: 66% of shoppers favor security protocols for online transactions because it makes them feel protected, yet 35% say they would transact more online if there were fewer security hurdles—and 1 in 4 has abandoned a transaction because creating a new account required too much information.

“Online retailers have reason to be excited by the latest eCommerce sales figures, but they also need to follow CNP fraud trends to understand the net impact on their bottom line,” says Monica Eaton-Cardone, co-founder and Chief Operating Officer (COO) of Chargebacks911. “It’s critical to have an effective loss-prevention program in place to ensure fraudsters aren’t the ones getting rich off your sales and marketing investments. However, that’s not all you need to do. It’s equally important to continually review and reassess those anti-fraud measures to stay ahead of criminals’ evolving tactics and the many different types of potential losses, from identity theft to chargeback fraud.”

Eaton-Cardone says there are several proactive steps eCommerce merchants can take to reduce fraud risk and improve profitability:

° Always verify customers’ addresses. Use the Address Verification System (AVS) to ensure the billing address listed on the order matches the information on file with the credit card company. High-value orders and higher-risk transactions may call for further scrutiny if the shipping address differs from the billing address.

° Flag orders with foreign IP addresses. Experian notes that orders originating from a foreign internet protocol (IP) address were seven times riskier than average, with IP addresses from China and Venezuela linked to the highest risk of fraud.

° Use geolocation and smart technology to reduce false declines. Just as physical and IP address verification can help identify suspicious orders, similar tools can be used to validate legitimate transactions so merchants can avoid losing out on sales and alienating valuable customers.

° Optimize the online ordering process. While most customers appreciate security protocols, it’s best to keep the order process as streamlined and low-friction as possible to avoid cart abandonment. Continually refine the process and adopt technological advances to ensure the right balance of security and simplicity.

° Challenge chargebacks. Some merchants consider chargebacks a necessary cost of doing business, but failing to dispute chargebacks contributes to an ongoing increase in friendly fraud. In addition to engaging in tactical representment, it’s wise to flag and scrutinize orders from customers that have previously filed a chargeback.

° Seek a partner with advanced technology and proven expertise. Fraud prevention tools are regularly reinvented to keep pace with fraudsters’ rapidly changing strategies. As a result, most merchants find it more cost-effective to outsource their loss-prevention solution to a specialist than to handle it in-house.

“As eCommerce fraud continues to rise, merchants will face growing losses unless they take immediate—and sustained—action,” adds Eaton-Cardone. “The best option is a multi-layered approach that incorporates state-of-the art technology and human expertise. This has proven to be the formula behind Chargebacks911’s high success rate, together with our ability to quickly pivot and retool to address emerging fraud strategies and shifting trends.”