Zoe’s new quarterly subscription service costs $100 per shipment and will feature at least one item sold at significantly below cost.
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What typically happens next is that the consumer will claim he did not receive the item, though in fact he did. The merchant may know it shipped the merchandise and want to dispute the chargeback, but that can be costly. To help retailers offset the cost of disputing friendly fraud, Litle & Co. streamlines the process of gathering the information merchants need to dispute chargebacks. Additionally, Litle & Co. automatically analyzes the characteristics of the transaction to determine the likelihood of winning the dispute and whether the cost of the dispute will exceed the price of the item in question.
"It's tough to distinguish friendly fraud from legitimate fraud and there is a cost for merchants to dispute a chargeback. The more merchants can lower dispute resolutions costs, the better," says Litle & Co.'s Cohn.
As e-retailers expanding into other countries offer local payment options, such as bank transfers, as a way to attract consumers that don't have a credit card or who prefer to pay with cash, they need to be aware that those payment options come with their own set of fraud risks.
Debit cards, which are commonly used in many countries outside the United States for online purchases, such as in Germany, are prone to account takeovers by criminals that gather confidential cardholder data through e-mail phishing attacks aimed at consumers. Once armed with this information, such as account numbers and government identification data, criminals can successfully masquerade as the accountholder, making online purchases using the accountholder's PIN and other personal and account information.
"Retailers doing business internationally need to understand the fraud patterns around each payment option in the countries where they do business and the type of fraud being perpetrated in each country," says ReD's Rezek.
With fraud rings becoming better organized and more sophisticated in how they attack merchant defenses, the onus is on retailers to evolve their data protection strategies and upgrade their fraud prevention technology to stay one step ahead.
"Retailers can't afford to sit still when it comes to fraud, because there is always a risk when it comes to an online transaction," Rouse says. "Successful fraud prevention comes down to being able to evaluate transactions in real time for fraud without affecting the customer experience."