Today, we’re looking at the challenge of e-commerce fraud faced by electronics retailers. 2016 research says e-commerce fraud is a $3.8 billion problem.

A recent report “E-commerce Fraud Challenges Facing Electronics Retailers” by Kount and Paladin Group highlights some of the challenges and some smart solutions for savvy online sellers.

Why are electronics so popular with fraudsters?

The report says the popularity of electronics for scammers is due mostly to the high value, popularity of electronics products and relatively easy conversion to cash. In other words, they’re easy to fence.

Margins are smaller on electronics than many other products and that makes fraud prevention even more critical because many more sales must be made to take up for losses.

I think another important reason is the profile of fraudsters likely matches the profile of electronics buyers more closely than other products.

Most popular scams

The Kount report identifies the most popular ways fraudsters work on this industry sector. They include:
– using guest checkouts vs account logins
– account takeovers and new account fraud are growing
– billing and shipping matches and mismatches
– expedited shipping is still a problem, though decreasing
– re-shipping and redirected shipping
– reselling products on other e-commerce sites such as eBay and Amazon
– “triangulation” schemes where a fraudster interacts between a legitimate buyer and seller
– so-called “friendly fraud” where customers claim they did not receive product, only received partial shipment, it was stolen or they did not order it.

The highest risk billing states included New York, New Jersey, Oregon and Florida. The highest risk shipping states were New Jersey, Florida and Oregon. South Dakota was the only state on the no-risk list.

Strategies to reduce e-commerce fraud

Kount offers several strategies to reduce fraud including:
– better management of false positives
– tighter controls and management during peak holiday shopping season
– managing shipping speed and high-risk shipping locations better
– keeping close watch on new and anonymous accounts
– minimizing friendly fraud by requiring customer signatures for receipts and blocking customers making frequent claims
– closer scrutiny of fingerprint or other ID devices
–  implementation of a more robust security platform and program with detailed data management tools.

E-commerce fraud will never disappear completely but with better procedures and client account management, you can minimize your risk whether you’re in the electronics industry or not.

Free report available

You can get a free download of this valuable report from Kount here.