If you are doing any kind of business online these days, then fraud protection has to be one of your top concerns. It’s no secret that incidents of online fraud and significant, high profile breaches in data security have been on the rise over the past decade. In fact, ecommerce fraud rose a whopping 30 percent in 2016, and according to a recent survey of executives, over 80 percent reported that their companies were the targets of cyber attacks, originating both from within the company and from the outside. That’s up from 75 percent in 2015, and 70 percent in 2013.
As more and more financial and commerce-based transactions move online and on mobile devices, cyber criminals are setting their sights on these channels. Many of these individuals are armed with a sophisticated toolbox of bots and stolen consumer data that includes credit card numbers and other identifying information, which they can use to hijack or create customer accounts in order to make purchases.
Online fraud can not only lead to lost revenue, but it can compromise sensitive customer or business data, lead to expensive charge-back fees, the loss of merchant accounts, and put a big dent in a business’ reputation. The bottom line is succumbing to a cyber attack is just like any other business emergency or disaster and should be treated that way.
Why Outsourcing Fraud Protection is a Smart Move
In an effort to save money, many smaller online companies typically try to manage their fraud prevention in-house. But more often than not the numbers don’t support this approach. The reality is that fraud protection can get very expensive. For example, recent research suggests that fraud and charge-back management can consume between 13 to 20 percent of a business’ operational budget. There are also numerous significant limitations inherent to many in-house fraud prevention programs and systems, such as being able to keep up with the constantly changing tactics, tools, and platforms being employed by cyber criminals. For businesses that operate world-wide, in-house systems must also be able to keep up with a large-scale set of transactions that may vary by region. Without this ability, many legitimate orders may be rejected, leading to a significant loss in current and future sales.
While letting go of in-house systems may be hard to do for something as sensitive and as important as fraud prevention, they are many benefits to outsourcing this function. Here is a rundown of the three biggest pluses:
- They use the latest technology. By outsourcing fraud prevention to an outside company, the business will gain access to the latest technology and screening techniques, as well as up-to-date industry knowledge. So, as the world of cyber crime evolves or consumer behavior changes, the business will still enjoy protection.
- Sales are processed more efficiently and accurately. Today, online consumers have come to expect instant results. Whenever an order is flagged for further verification, a dedicated, outside service can quickly move to confirm customer details. Furthermore, a good fraud protection provider will use more accurate screening tools for global and regional sales so that fewer legitimate orders require verification in the first place. This can lead to a better customer experience and the ability to enter more markets.
- Businesses can free up precious resources. When a growing online business diverts significant resources to in-house fraud prevention that means fewer resources are available for things like product research and development and strategic management. By passing this responsibility off to a qualified fraud prevention service, business owners and their staff are then free to focus growing and developing the business.
Now, it almost goes without saying that the quality, level, and extensiveness of service among fraud screening providers will vary, so business owners and their management teams need to be exercising their full due diligence before agreeing to work with a particular company. But, once an appropriate fraud screening provider has been found, relying on their services can bring a dramatic, positive change for online sales and business growth in general, and that’s something any business would want.