TAMPA BAY, Fla. (PRWEB)
December 04, 2017
According to the LexisNexis 2017 True Cost of Fraud Study, the retail industry is now losing 1.58% of revenue to fraud, with a fraud multiplier of $2.77. eCommerce merchants face even greater losses, with fraud accounting for 2.17% of revenue and every $1 in fraud amounting to $2.48 in total losses.(1) Chargebacks911, a leading dispute mitigation and loss prevention firm, says merchants should analyze their current fraud losses and weigh the respective merits and costs of maintaining an in-house fraud team or partnering with a third-party fraud specialist.
Based on the LexisNexis study findings, a $50 million eCommerce merchant is losing over $1 million to fraud each year; and when the $2.48 fraud multiplier is taken into account—including fees, interest, merchandise replacement and other costs—the losses total nearly $2.7 million. Even for smaller merchants with $10 million in annual revenues, total losses would exceed $500,000 per year. The LexisNexis study also revealed that 2 in 5 eCommerce transactions are likely to be fraudulent; of the 1,159 transactions eCommerce merchants average each month, 495 of them—or 42.7%—involve fraud attempts. Yet relatively few eCommerce merchants track fraud by transaction type: 41% track prevented fraud, 38% track successful fraud, while 50% do not track either type of fraud.(1)
“These latest study findings suggest that many eCommerce merchants have no idea how much money they’re losing to fraud,” noted Monica Eaton-Cardone, co-founder and Chief Operating Officer (COO) of Chargebacks911. “If online retailers are relying on a small in-house team to identify and prevent fraud, manually review orders, respond to chargebacks and monitor evolving fraud threats, it’s likely that something is slipping through the cracks. If they’re unable to keep up with the volume of flagged transactions, they may end up approving fraudulent orders, declining legitimate orders or taking a long time to process orders, which can negatively impact the customer experience. And if they’re not challenging the majority of chargebacks, merchants can suffer an even greater hit from friendly fraud.”
While some businesses may balk at the cost of fraud prevention, Eaton-Cardone says effective fraud solutions deliver a substantial return on investment; they not only help…