LexisNexis Risk Solutions carried out a study concerning U.S. merchants in 2019. Based on the study called The True Cost of Fraud, every $1 of fraud loss cost companies $3.13. The study also showed that there was a huge increase in fraud trials and successful attacks. If this is what you’re interested in and if you need alternative small business loans, this article is right for you.
Alternative Small Business Loans & Cost of Fraud
First of all, let’s see when true fraud occurs. Well, it happens when hackers make use of stolen payment data to make purchases for personal or sale purposes. When the cardholder finds out he/she’s been caught in the fraud, he/she requests a chargeback. True fraud is mostly organized by gangs that usually use bots.
Now, let’s focus on the above mentioned study results:
- The costs of fraud were 6.5% higher as compared to 2018 and represented the highest point in the 10 years.
- The number of total fraud attempts that were a success increased by 123% from 2018 to 2019. The number of attempts that were a success increased by 84%. The average value of fraudulent transactions that were a success increased by 34%, thus reaching $248 from $184.
Moreover, CNP or card-not-present eCommerce fraud now represents up to 70% of the total payment card fraud. eCommerce merchants lost $16 billion because of true fraud in 2016 in the U.S. alone, as Javelin Strategy & Research reported.
Besides, according to Visa, merchants having upgraded to EMV saw an 82% decrease in counterfeit fraud dollars in-store from September 2015 to June 2018.
With all this in mind, it’s immensely important for eCommerce merchants to work with a reputable lender and processor like First American Merchant to get only the best for your business needs.
FirstAmericanMerchant.com is an award-winning and BBB-accredited high risk lender and processor that offers alternative small business loans at the cheapest rates in the industry. The access to the necessary business funding and the latest fraud prevention techniques is fast and hassle free.
Cost of Fraud for E-Commerce Merchants
The costs of eCommerce fraud aren’t merely limited to lost revenue. In fact, they’re measured by a high rate of chargeback fees, excessive fraud prevention efforts, and lost merchandise.
According to Experian and Juniper Research, merchants also pay the cost of shipping and insurance when dealing with fraudulent purchases, chargeback fees from payment processors, in-house manual reviews for orders, as well as 3rd party fraud detection and fraud prevention services.
Moreover, when merchants reaction towards fraud is rather strict, or when they turn to one-size-fits-all solutions to prevent fraud, chances are they’ll experience losses that won’t be easy to calculate and will have not only short- but also long-term consequences.
To sum up, fraudsters don’t stop innovating and developing more advanced techniques to attack businesses and consumers. So, you, as an eCommerce merchant, can’t stay behind the latest fraud trends. To prevent fraud, you need to fight all the time. By keeping up with the most advanced developments, you can protect your business to the best possible extent.