Online Fraud: How E-Commerce Businesses Are Getting Affected
The Indian shopping scenario was completely disrupted by the increase in the fame of e-commerce platforms. Interactive social media campaigns focused on user experience and consumer-friendly websites, with mobile apps, skyrocketed the e-commerce businesses. Getting that product from the ‘wishlist’ right to their doorsteps became a dream come true for the consumers.
However, the surge in e-commerce businesses didn’t come without its own complications. In the race to match up to increasingly competitive and booming startups, e-commerce businesses constantly get subjected to data theft, consumer frauds and user abuses!
E-commerce businesses are left exposed to a high number of frauds and abuse in the form of Cash on Delivery fraud, Return to Origin (RTO), promo code abuse, merchant abuse, fake item return fraud, payment fraud, and much more! These online e-commerce frauds affect a business in more than one way. However, businesses often end up ignoring them or end up using static rules altogether.
Let’s take a look at how online fraud is affecting e-commerce businesses in India:
Direct Revenue Loss: The primary effect of any kind of e-commerce fraud is on the revenue of the business. This includes the cost of fraudulent chargebacks, loss to promos, refunds, logistics expenses, and expenses relating to preventing fraud manually.
Loss of Inventory: An e-commerce business also loses majorly in terms of products lost in product-returns like fake product returns, COD frauds, and frauds relating to RTO products that never come back to the e-commerce seller.
Loss of Goodwill: Fraudsters not only cause damage to the earning of an e-commerce platform, they also damage its reputation and goodwill. Scammers end up posting fake reviews and ratings on the website that leads to a loss of genuine consumers for the business, further damaging the business.
Manual Management of Fraud: Manual review of each transaction not only wastes time but also leads to high amount of wastage of funds. Manually detecting fraud leads to a huge pile of pending orders that need to be checked for fraud and approved by a person assigned. This delay may lead to a decreased rating and chances of future transactions from actual customers.
Is There An Easier Way?
Curbing fraud in e-commerce needs a more advanced approach than merely relying on static rules and manual detection. Machine Learning technology or Artificial Intelligence, like Mitra - an advanced e-commerce fraud prevention tool, that collects huge amount of data and analyses it instantly - provide the easiest solutions.
Fraudsters leave behind their trace, referred to as the ‘device fingerprint’ that remains hidden behind the vast volume of data and cannot be detected by manual measures. Artificial Intelligence (AI)- based fraud prevention engines evaluate this colossal amount of data, find anomalies and highlight probable frauds and abuse.
With AI Engine Mitra in the mix, evolved machine learning algorithms are being adopted by e-commerce businesses worldwide to discover patterns of fraud in their transactions. Such online fraud prevention softwares develop risk-patterns and highlight the key areas where the business is lacking security measures.
AI-driven fraud prevention solutions can be used to increase security and prevent fraud for different kinds of e-commerce businesses, including retail businesses, wholesale platforms and financial and non-financial platforms.