In the dynamic landscape of online retail, e-Commerce businesses increasingly face sophisticated threats that undermine their profitability and customer trust. Among these threats, promo abuse and chargeback fraud stand out as two prevalent challenges that can have a significant impact on a company’s bottom line. As the volume of online transactions continues to surge, the urgency to deploy advanced protective measures has escalated.
Understanding the threat landscape
To understand how to thwart these fraud threats, we need to understand what they are and the harm they can cause a company.
Promo abuse, also known as promotional abuse or coupon fraud, occurs when individuals or groups exploit promotional offers by violating the terms of use. This can include using software to create multiple accounts, sharing codes on unauthorized platforms, or even reselling discounted products for profit. Such activities not only lead to revenue loss but can also inflate customer acquisition costs and skew marketing data.
Chargeback fraud, or friendly fraud, happens when a customer makes an online purchase and then requests a chargeback from their bank after receiving the goods or services, falsely claiming that the transaction was unauthorized, or the item was never delivered. This not only results in a direct loss of sales but also incurs additional fees from payment processors, and if it happens frequently, can damage a merchant’s reputation with credit card companies.
A threefold strategy to fight fraud
In response to these challenges, Telesign offers a comprehensive strategy that empowers e-Commerce businesses to combat promo abuse and chargeback fraud head-on. Telesign does this in 3 ways:
- Phone number data: A cornerstone of Telesign’s strategy is leveraging phone number data to deter fraudulent activities. Implementing this verification step during account creation or before allowing access to promotions can significantly diminish the risk of abuse. It ensures that each account correlates to a genuine individual, complicating efforts by fraudsters to exploit promotional mechanisms through the creation of multiple fraudulent accounts.
- Multi-factor authentication (MFA): Enhancing security further, MFA introduces an additional hurdle for unauthorized access to customer accounts. By necessitating two or more forms of verification, such as a unique code sent to the user’s mobile device, MFA acts as a robust barrier against account takeover attempts. This security measure is crucial in preventing chargeback fraud, which often follows unauthorized purchases made through compromised accounts.
- Intelligence: Telesign sets itself apart with its intelligence-driven risk analysis, employing advanced algorithms to analyze a broad spectrum of data points linked to a phone number. This in-depth examination covers aspects such as transaction history, geographical location, and the device type associated with the number. Through real-time and comprehensive analysis, Telesign can pinpoint the risk level of each transaction or account creation attempt with accuracy. This forward-looking intelligence enables businesses to preemptively identify and flag potential threats, significantly mitigating the risks of both promo abuse and chargeback fraud.
Telesign’s solutions for enhanced security and risk mitigation
The enhancements that Telesign’s multifaceted approach offers are extensive. By integrating phone number verification, businesses can work to drastically reduce the incidence of promo abuse, preserving the integrity of marketing campaigns and ensuring that promotional offers reach genuine customers. The adoption of two-factor authentication bolsters account security, safeguarding customers from the repercussions of account takeovers and unauthorized transactions. Meanwhile, Telesign’s intelligence-driven risk analysis serves as a critical line of defense, enabling businesses to discern and mitigate risky behavior before it can inflict financial and reputational damage.
The challenges posed by promo abuse and chargeback fraud can be daunting, threatening not only the financial stability of e-Commerce businesses but also eroding customer trust and operational integrity. However, through the adoption of Telesign’s comprehensive suite of security solutions, businesses can protect themselves from these threats. By leveraging phone number verification, two-factor authentication, and intelligence, e-Commerce platforms can not only prevent fraudulent activity but also enhance their overall security framework. This strategic approach fosters a safer, more reliable online shopping experience, ensuring that e-Commerce businesses can continue to thrive in an environment marked by ever-evolving threats.
Safeguard your e-Commerce business against fraud and ensure a secure and trusted experience with your customers at every stage of their journey–explore our e-Commerce hub today.
