Retailers Need to Combat Fraud and False Declines to Win Lifetime Customers

“Forty percent of shoppers who are declined on their first visit won’t return, and one-third will end up seeking out the competition,” says Liron Damri, president and co-founder of Forter. In “The Way Payments Are Now Done,” Damri and 32 other industry executives share their insights on how consumer behaviors continue to change amid the rapid digitization of payments—including in the arena of security and fraud.

Over the course of the past year, the volume of online shoppers grew at twice the rate as before the pandemic. New shoppers have created opportunities for businesses, but have also introduced surface area for fraud and abuse.

Since new shoppers lack history and context, it’s not surprising that their transactions are five to seven times more likely to be declined than other customers. To make matters worse, 40% of shoppers who are declined on their first visit won’t return, and one-third will end up seeking out the competition.

The vast majority of those are false declines, and so businesses have lost revenue and customers. These same new shoppers have proven (based on our dataset) to be more likely to reuse passwords and less likely to properly secure their data.

As a result, between 2019 and 2020, we saw account takeovers (when a fraudster attempts to gain access to an account with stolen credentials) decline by 5% while bad actors harvested data. In 2021, they put that data into action, with account takeovers growing by 55% year over year.

Therefore, an emerging business routine includes the effort to make better decisions about eCommerce interactions — especially as it pertains to new shoppers. Forter has been supporting this effort with our Persona Graph. Across our network of customers, we have built a dataset of more than one billion online personas. Now, when any of our customers interacts with a new shopper, they are pattern-matched to the entire dataset. If the shopper has transacted elsewhere, there is context on their trustworthiness. If they have not been seen across the network, personas like theirs can be used to offer a precise decision on whether to accept or reject a transaction.

In this way, we are helping businesses start relationships with new shoppers and significantly growing the customer’s lifetime value.