Amy Good, Legacy Bank branch manager
The financial damage to retailers resulting from people making online purchases before and during the pandemic has been substantially documented. A recent LexisNexis® Risk study notes that every $1.00 of fraud now costs U.S. retailers $3.36. The cost of fraud for strictly online merchants is even higher.
"These figures focus on larger businesses, but small and mid-sized retailers are not immune to this problem," says Amy Good, branch banager of Legacy Bank University Park location. "According to the Association of Certified Fraud Examiners small businesses lose a median of $200,000 before most fraud schemes are uncovered. Fraud is increasing as businesses encourage people to buy online and pick up purchases at the store or get home delivery.
According to Good, retailers seeking to reduce fraud should familiarize themselves with highly used fraud concepts and the abbreviations, jargon, and terminology used to describe fraudulent activity starting with CNP (Card Not Present). This refers to scammers using stolen credit card information to buy products or services online rather than produce the card in a store.
Other top terms include C&C (Click and Collect) which describes the process when someone fraudulently purchases an item online and then visits the retailer to pick it up and POC (Point of Collection) which means the actual curbside or in-store pick up process. Then there is also Friendly Fraud conducted by individuals who order items online, have them delivered and then deny ordering them in an attempt to secure a refund while still keeping the item. There is yet another twist. Sometimes the fraudster will use an individual’s credit card information and order an item to be sent to their home just to confirm that the card is valid before using it again for larger purchases.
"Retailers seeking protection from fraud loss should at least implement a do-it-yourself prevention program and may well consider adopting fraud detection technology if additional security is desired, " explains Good.
Scammers aren’t interested in small, inexpensive purchases. As a result, retailers should be on the lookout for online purchases of items with a higher than average resale value or perhaps a large bulk order for smaller items that is larger than normal. After all, these ‘customers’ aren’t planning on paying for it themselves anyway.
Another clue is a rush order or overnight shipping request to an international address thus encouraging the retailer to hurry the order processing and not take the time to review its validity.
Curbside or in-store order pickup can be great for both customers and fraudsters. It might be wise to ask for identification when pickups are made. Honest customers understand when the reason for the policy is explained.
If a retailer’s bank sends an alert that a customer is seeking money back on a purchase it’s wise to see if this individual has placed other orders utilizing the same card data, telephone numbers, physical addresses or email addresses. Chargeback Gurus, a firm specializing in this area, notes that 83 percent of people purposely committing friendly fraud do so more than once.
Many small retailers may choose to retain fraud prevention technology firms. Their services can be used to identify suspicious looking transactions which can then be reviewed by store personnel for discrepancies and irregularities. The numerous firms providing this service can easily be identified through an internet search.
Amy Good is the branch banager of Legacy Bank University Park location.