The introduction of EMV chip cards that reduce fraud in stores, will ultimately lead to more online fraud attempts. Retailers must be prepared.

Online retail reached a major milestone this past Thanksgiving weekend: according to the National Retail Federation, more people shopped online than in stores. It’s more proof that e-commerce is an increasingly important element both in retail and in consumers’ lives.

This boom in online business is great on many levels, but there’s one fly in the ointment for e-commerce merchants, and that’s the attraction of fraudsters to online retail. And the more significant e-commerce becomes, the more attractive it will be to criminals. So what do retailers need to know as they head into 2016?

Online Fraud Increases, Post EMV

The payments world was in a flutter over EMV adoption this year, and a lot was said about a resulting spike in online fraud. But, while it’s true that fraud attempts do seem to have risen this year compared to last year, it’s also true that the rise hasn’t matched the concerns pre-EMV. So should retailers be worrying?

Retailers shouldn’t worry—but they should prepare, and prepare now. The fact is that although attention was focused on October 1, when adoption became official, changing over to EMV is gradual. That’s why Forrester’s prediction of a 55% increase in online fraud was not tied to October, but rather predicted over a three-year period.


Over the next few years, online fraud will be increasing. Retailers who ignore that reality are in for heavy losses. But the slow shift to EMV is an opportunity for retailers to scale their fraud prevention. Don’t put off a review; with EMV an established fact, you know that if the solution you’re using isn’t completely scalable, you’re going to run into trouble in the near future.

Moreover, retailers should use the assessment to measure the impact that fraud prevention is having on their business as a whole. Overly strict rules and policies which simply reject transactions outright result in lost legitimate sales. Fraud prevention should be consumer-centric, and aim to boost sales – just like the rest of the company.

Say Goodbye to Rules, Scores and Manual Reviews

Rules, scores and manual reviews used to be an essential and unavoidable aspect of effective fraud prevention. But that’s no longer the case. Full automation is now an option, and increasingly necessary. According to Gartner, “the explosion of data sources and complexity of information makes manual classification and analysis infeasible and uneconomic.”

Today’s fraudsters are clever and creative, and they move fast. Manually updated rules, scores and manual reviews can’t keep up. Retailers who want to prepare for the EMV rise in fraud must automate. Staying manual is slow, costly and can result in good customer declines.


Fulfill As Fast As Possible

As recently as two years ago, two-day delivery was a sure way to woo shoppers. But e-commerce norms move fast, and consumer expectations are always heading up. Amazon Prime Now represents a new step ahead, and customers know it.

Fast fulfillment means instant fraud prevention. When every minute counts, building delay into checkout doesn’t make sense. This links back to retiring manual reviews, which are time-consuming (an average of 5 minutes per order) and a major cause of delay, especially during crucial holiday periods when overwhelmed reviewers cause backlogs and angry customers.

Many retailers showed signs of fulfillment strain this holiday—and that’s not likely to sit well with shoppers, or encourage them to return in the year ahead. To avoid these problems, fraud prevention must be automated, and real-time.

Omnichannel and Every Channel


Retailers must ensure that their fraud prevention is up to the “omnichannel and every channel” challenge—able to cope with customers moving across a variety of channels, and also optimized for each channel individually.

Consumers love to order online and pick up in store, and research and purchase across a range of devices. They’re already entrenched in an omnichannel perspective – it’s a case of retailers having to innovate to match customer expectations.

Fraudsters are just as thrilled about omnichannel, because it opens up new opportunities for successful theft, and they’ll take advantage of any weakness they find. Fraud prevention must be able to join the dots between channels.

In terms of optimizing for individual channels, a clear area for improvement this year is mobile. Adobe revealed that mobile devices accounted for 33% of online sales on Black Friday, and mobile sales grew almost 53% on Cyber Monday.

Encouraging the mobile consumer to spend on your site means frictionless checkout. Ensuring that fraudsters don’t cheat you on mobile means being aware of the differences between data available through mobile and through e-commerce, and adapting fraud prevention systems to accommodate that. In both cases, it means optimizing for mobile.


Make Fraud Prevention Part of Your 2016 Planning

Payments, e-commerce and consumer expectations are changing faster than ever. One of the things retailers must do to keep up, and keep competitive, is make sure they’re using the latest fraud prevention technology to automate and shift to real-time, to block fraudsters and to ensure that fraud prevention is contributing to the overall business goals of growth and customer satisfaction.

Forter provides fraud-prevention technology to online retailers.