Alibaba, China’s largest online company, reported gross merchandise value (GMV) of $30.8 billing on Singles Day or 11/11. This metric, which represents the dollar value of goods sold by third parties over Alibaba’s platform, is up 22 percent from last year. Singles Day is the largest online shopping day in China, far exceeding the value of US online sales on Cyber Monday which reached a record $7.9 billion in 2018.
Nearly 2 million username and password combinations along with 330,000 email and password combinations were exposed in a data breach impacting German social media platform Knuddels.de. The company received a €20,000 fine related to the EU’s General Data Protection Regulation (GDPR) because the passwords exposed were stored in plain text.
Measuring False Positives is Not an Exact Science but Using Multiple Metrics can Provide a Better Understanding
When a legitimate customer has their order declined because of fraud concerns they may purchase from a competitor and may never return to the merchant who turned them away. This is not only painful in terms of losing the sale and potentially the lifetime value of that customer, but this makes measuring false positives difficult. Even if an organization identifies customers who reattempt their transaction or call-in to customer service to complete their order, this is not a complete representation of the volume of sales insults; it may only be the tip of the iceberg.
The first step to effectively measuring false positives is understanding that it is not an exact science, that the metrics we can use are proxies, and the more methods we have for deriving and measuring these proxies the closer we can come to understanding the whole picture.
A recent study from PPRO and Edgar, Dunn & Co. found that while about 40 percent of online sales in European countries are made to customers abroad, just 11 percent of U.S. eCommerce sales are purchases made from foreign countries. This lopsided figure underscores the difficulty of facilitating cross-border transactions, but there are many factors likely contributing to this large discrepancy.
Cross-border eCommerce is a two-way street, but traffic doesn’t flow evenly across the two directions. While just 11 percent of U.S. eCommerce sales originate outside of the United States, more than one-third of U.S. consumers shop online from brands and websites outside of the U.S. This is comparable to the share of consumers participating in cross-border eCommerce from Germany (32 percent) and the United Kingdom (38 percent).
While nearly 30 million Facebook users had their names and basic contact information stolen, about 14 million of these data breach victims also had their birthdate, recent search history and locations compromised. Fraudsters are likely already using this information to help crack security questions on consumer accounts as well as to better target phishing emails and other scams attacking these recent breach victims.
We may be suffering from “data breach desensitivity” but the recent Facebook data breach is meaningful. Many of the victims can expect to receive phishing emails and even direct phone calls purporting to be from their card issuing bank or financial institution.
Guest Post & Case Study by: J. Carlson, Certified eCommerce Fraud Professional
Chargebacks involve quite a few stringent processes and complex procedures. Making sure you provide adequate information when challenging a chargeback dispute is key. One thing that you can do is provide compelling evidence in those cases where the cardholder has claimed Fraud – Card not present (10.4) or Merchandise/Services Not Received (13.1).
Compelling evidence documentation can be used to provide support for various card not present transactions including charges for airlines, digital goods, and recurring billing services. Some forms of documentation that would be accepted as Compelling Evidence are: Purchase details and description of services, Renewal and cancellation terms accepted by the cardholder and proof of a previous transaction that was not disputed.
Card Not Present channel Merchants cite order rejection rates of nearly 3 percent for domestic transactions and nearly 7 percent for international orders. Meanwhile more than half of merchants depend on AVS and CVV checks, considering them to be effective fraud tools. While most merchants measure fraud rates and order rejection rates, far fewer take the next step to understand false positives.
According to the Merchant Risk Council (MRC) 2017 Global Fraud Survey, eCommerce merchants declined 2.6 percent of all orders for suspected fraud, and 3.1 percent of orders over $100. CyberSource found higher order rejection rates in their 2017 Fraud Benchmark Study: 2.9 percent for domestic orders and 6.8 percent for international ones. While merchants are declining 3 percent of more of their orders, not all of these are actually fraud attempts.
According to marketing analytics data from Jumpshot, when Amazon’s Prime Day kicked-off on Monday July 16 their daily sales conversion rate was just 4.5 percent higher than the previous Monday. On Tuesday July 17, however, after Amazon resolved many technical issues, the largest online retailer enjoyed a sales conversion rate 40 percent higher than the previous Tuesday, ultimately making Prime Day a success with over $4 billion in online sales. Despite website and checkout issues at launch Amazon saw a slight bump in conversion on the first (partial) day of their sale, but correcting these errors to led to an additional 35.5 percent increase in conversion the following day.
PayPal completes their fifth acquisition in the past 12 months, this time purchasing machine learning fraud prevention provider Simility for $120 million. PayPal COO Bill Ready says each of these five recent acquisitions are part of the company’s effort to strengthen the services they provide to merchants.
Simility was founded in 2014, they are based in Palo Alto and provide advanced risk analytic and modeling solutions for fraud prevention in the Customer Not Present (CNP) channel. Major clients include eBay/StubHub, Dick’s Sporting Goods and OfferUp. The fraud prevention provider had previously raised $25 million, including PayPal as one of their early investors.
Although Apple Pay is the most popular cross-merchant mobile wallet with more users than Google Pay and Samsung Pay combined, the Starbucks app was used for by nearly 1 million more US consumers for mobile payments in 2017, according to data from eMarketer.
This data is extrapolated from surveys of US consumers age 14 and older who have had made at least one proximity mobile payment in the prior six months. eMarketer estimates that 20.7 million US mobile proximity payment users made payment with the Starbucks mobile app, compared to 19.9 million who used Apple Pay, 9.3 million Google Pay and 8.4 million Samsung Pay users.