Benjamin Franklin famously said an ounce of prevention is worth a pound of cure, an insight gleaned from his experience founding the nation’s first volunteer fire department in Philadelphia in 1736. Fires, he observed, are easier to prevent in the first place than having to fight back once they’ve already broken out.
And while the aphorism is old, the insight it carries with it is just as relevant to cybersecurity in 2021 as it was to firefighting in 1736, Sift Trust and Safety Architect Brittany Allen told PYMNTS. Merchants need to get proactive when it comes to fighting back fraudsters, instead of relying on the reactive methodologies of the past.
“When fraudsters gain access to a legitimate customer’s account, a merchant who conducts their fraud review only at the time of purchase will miss out on being able to stop both the fraud loss and a negative customer experience for that good customer before it can even start,” Allen said.
It means merchants, particularly small ones that start the race behind their larger counterparts when it comes to consumer trust, need to partner with solution providers that can offer them highly accurate, automated fraud detection tools and proactive, fraud-blocking features.
Where good customers go, fraudsters will follow and try to turn benefits like buy online, pickup in store (BOPIS) and fast shipping to their benefit by making it easier to get ill-gotten goods in hand before they can be discovered.
And consumers don’t have a lot of patients or tolerance for being the victims of fraud, as PYMNTS and Sift’s new Digital Security Playbook: Building Trust And Loyalty Online demonstrated. More than half of consumers said they would not patronize an online retailer again if they experienced an incident of fraud. Fraudsters are relentless and are going to continue to be. That means merchants have no choice but to up the level of their fraud-fighting game and keep up with rising consumer expectations.
Why SMBs in Particular Need to Get on Board
The small- to medium-sized business (SMB) community, the playbook demonstrated, comes into this arena behind their larger counterparts in terms of consumer trust. Said simply, wary consumers have real doubts that SMBs are up to the tasks of keeping them and their sensitive data safe, Allen said, while some 84 percent of first-time shoppers with SMB merchants were concerned about data security within the transaction.
“So, smaller merchants must first acknowledge that fraud will target their business if they aren’t already experiencing fraud attacks,” Allen said. “It’s a matter of when, not if, which highlights the importance of improving vulnerabilities, such as poor data hygiene, before it’s too late,”
She noted the cost of getting it wrong is going to mean the permanent loss of a customer who is going to move on to another alternative in the vast majority of cases.
What that means for SMBs that often lack the resources of enterprise players is finding a strong partner to help identify and mitigate fraud while sharing best security practices that offer them a more layered attack method in confronting fraudsters’ attempted entry into their data streams.
That might mean adding email address verification, or even inserting some “friendly friction” into the transactional process, she said. Consumers don’t like it when they hit friction that seems to exist for no reason, but friction that makes a process feel safer — even if it goes slightly slower — is something they will usually accept.
Getting their data stolen, however, is something they are never OK with, and will usually abandon a merchant over.
What Merchants Need to Do Next
What merchants of all sizes need to do is think about how they want to revise and remake their fraud prevention plans for a future in which they are certainly going to have to face it on a persistent basis, she said. They will have to “customize their fraud prevention strategy” not against fraud in general, but against the types of fraud that are targeting them in specific.
Allen said fraud isn’t going to go away, but merchants can learn to fight it off better — and in fact, they must.
“If they aren’t taking those steps, then they aren’t empowering themselves to be more successful as they try to return to the point where they were pre-pandemic,” she said.
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