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Mitigating Fraud in Furniture Ecommerce in 2023

By Blueport Team Feb 28, 2023 10:18:48 AM

furniture ecommerce fraud

More than ever, customers begin their shopping journey online.  Why? 

First – it’s easy! Shoppers can readily browse numerous websites and search for products from the comfort of their homes. 

Second – the COVID pandemic increased the adoption of ecommerce and top retailers are increasingly improving their website’s functionality and omnichannel features in order to capture sales and market share.

Third – for younger generations online shopping is more customary and a more familiar way to shop than in the store.

Finally – consumers are now accustomed to shopping for everything online, and now, furniture is no exception. Even if your customers ultimately buy in your brick-and-mortar store, more often than not they begin the process online which in turn means they are closer to a purchasing decision by the time they walk into your store.


Growth in Ecommerce Sales Leads to Growth in Online Fraud

Global ecommerce sales are expected to top $6.5 trillion by 2023, even though this is a great statistic for merchants there is also an expected rise of payment fraud which is expected to reach over $69 billion in 2025. More than ever, bad actors, or those committing fraudulent activity, have multiple avenues to exploit online for retailers. For example, the COVID-19 pandemic led to new pick-up options such as BOPIS (Buy Online Pick Up in Store). This means merchants need to have efficient and effective fraud solutions in place so as bad actors continue to evolve their techniques, merchants can counter them by adapting their business operations, fraud prevention tactics, and technologies.


Trends of Online Fraud in 2023

It is expected that the top fraud trends will continue to include card testing fraud, friendly fraud, phishing, synthetic ID, account takeover (ATO), and promotion abuse.

Card testing is a way for fraudsters to figure out if a credit card will work for them. Typically, fraudsters will purchase a number of credit card numbers and information online and will try to place small dollar-value orders to see if those cards work. Once the fraudster finds a usable card, they will then go for the more expensive purchase. 

Friendly fraud occurs when the real cardholder disputes a transaction but had knowledge of and/or benefited from the transaction.  According to the Ravelin, friendly fraud increased by almost 50% for merchants in 2021. Sometimes this is due to buyer’s remorse or a customer trying to abuse the system. 

Phishing is when a fraudster sends malicious emails designed to trick people into falling for a scam. The hope is that the fraudster will be able to gain access to user’s financial information, system credentials, or other sensitive data.

Synthetic ID occurs when a bad actor creates a fake credit account using a combination of real and fake personal information. Financed transactions hold additional risk since an account may be created with a compromised social security number. While these accounts may appear to be legitimate because there is partially correct data provided, the scope is difficult to determine because this type of fraud can go undetected for years.

Account Takeover happens when a bad actor provides accurate billing information which does not correspond to the actual social security number or identity of the original account holder. This may occur when a bad actor uses stolen credentials to access an account and change the information from the real cardholder to their own.  Although it is extremely difficult to detect, other high-risk data points and a strategic workflow can help fraud experts to assess the customer’s footprint and prevent the majority of account takeover transactions.


What Fraud Means for Furniture Retailers

Signifyd reported that customer abuse for home goods rose 122% between 2021 and 2022, and even “when these claims are false they are generally attempts to receive an undeserved refund or get an item for free”. With every step a merchant takes to prevent fraud, bad actors remain relentlessly determined to counteract preventative measures. It’s a proverbial battle of who can outwit the other, and like every other sector growing online, the furniture industry must be aware of ever-changing fraud tactics.

In an era of data breaches, the fraud landscape continues to grow across ecommerce and the value of fraudulent transactions tends to be much higher than a general purchase.  This year, Blueport found that the average value of fraudulent transactions was roughly 1.5x the total average order value of non-fraudulent purchases.  In the case of a chargeback, in addition to incurring the loss of merchandise, merchants are also impacted by the loss of all operational support costs and bank fees.


The Blueport Fraud Methodology

Chargeback rates for retailers on the Blueport platform are significantly lower (better) than industry averages.  If unchecked, these fraudulent transactions could have resulted in costly chargebacks for the retailers.  It is therefore important that high-risk transactions are properly managed to limit losses while keeping good customers happy. 

Blueport has a proven track record of protecting our clients from fraudulent activities, offering an expert perspective on the need to execute a strong fraud management system that protects omnichannel sales and providing robust tools, reporting, and analytics to back it all up. 

 It’s about our balanced fraud expertise: Our proven model combines machine learning and a rule engine with human intelligence and manual order reviews for a holistic strategy. We understand various risk tolerance profiles and rely on data to support minimizing manual review and boosting “good” revenue while being sensitive to the customer experience and tenacious towards chargeback mitigation.

It’s about understanding the furniture industry: Furniture shopping is a combination of online and in-store research. Blueport’s platform is the leading solution for omnichannel initiatives. A Risk & Reward study reported 45% of consumers research furniture purchases online and 24% of those consumers convert to a sale. We understand the customer demographic, as well as online and in-store relationships, and are prepared to manage the risk across the ecommerce channel.

It’s about the data: Blueport adopts a next-generation, multilayered fraud approach to combat rising fraud exposure and to sustain a well-supported customer experience.  We are able to identify evolving trends and perform root cause analyses for individual and collective merchants on our platform. Further, Blueport has an enterprise workflow that is captured in robust reporting and analytics allowing for insightful dashboards and comprehensive quarterly reviews of fraud and risk performance. 

Blueport helps furniture retailers handle the scale of their ecommerce business as sophisticated fraudulent attacks are continuously evolving. Our fraud team protects the business and the brand while providing a positive customer experience and preventing chargeback losses. Interested in learning more?



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