TWO SHIPPING SCAMS AT ECOMMERCE
With the holiday season in full effect, killer customers are on high alert and merchants should be too, considering more than 2.5 billion packages are expected to ship this holiday season. We teamed up with our fraud prevention partner Signifyd and the team at ShipStation to help online merchants stand clear of the 3 most common shipping scams killing ecommerce business profits this year.
Package rerouting commonly occurs when a customer commits payment fraud and uses a stolen credit card to make an online purchase. In most cases, the transaction is cleared because the legitimate cardholders address is used without being flagged. However, once the customer receives shipping confirmation and the package is en route, the original address is changed.
In another case, the customer purposely provides a false shipping address and monitors the package through the online tracking information given upon confirmation. Once they’re notified that the package is undeliverable, the customer contacts the shipping company to provide a new delivery address. Unfortunately for merchants, additional fees may occur when the package is successfully rerouted.
Lastly, a customer can make an online order and after confirmation, call the merchant to ask if their preferred shipping service can be used. Most likely, these customers have an established relationship with outside shipping services and are confident about receiving shipped items unflagged, making it harder to track and prove the package was ever delivered.
In all three cases, by the time the legitimate cardholder notices the unauthorized purchase, the scammer’s already enjoying their products free of charge. These types of fraud leave the online business with losses up to $10,000 in shipping fees, lost product, and lost profit… so now what?
Preventing Package Rerouting
Solving this issue requires a multi-step approach. First, it’s important to note not all customers have malicious agendas. In fact, many may have good reason to reroute a package. To avoid upsetting or offending legitimate customers, merchants should start with a clear shipping policy stating there’s a zero-tolerance for package rerouting on their website, social media profiles, and email confirmation.
Creating detailed shipping terms and conditions that address various errors that arise during shipping is important when dealing with customer claims. One major way to gain clarity into issues is to offer tracking. Tracking lets you know that an item has been delivered.
In addition to providing these details, make sure a customer’s zip code and address are validated before shipping. Lastly, be sure to ship only to the original address provided in the confirmation details, especially for a large order. Or you might want to try Magento Hosted Solution with all the antifraud features included.
Item Not Received
One of the most insidious shipping scams occurs when the item marked ‘not received’ actually was received. False INR claims cost retailers millions every year, but they also cost merchants their reputation. Once word’s out that a retailer tends to give in to INR claims, be it via social media, dark web forum, or even a legitimate publisher, similar claims will flood in.
The scam is popular because it’s easy. No need to commit online identity theft by stealing someone’s personal information, or hack into a customer’s retail account this is why you have to pay attention to website security and may want to use Magento development services to develop a security extension.. All abusive customers need is the will to cheat the system without care.
To put it simply, scammers accomplish this by ordering a product, bringing the product into their homes, and then telling their credit card companies their orders never arrived. Such claims create one of the thorniest situations in the retailer/customer relationship.
If the retailer challenges an item-not-received claim and it’s legitimate, chances are the retailer just lost a customer for good. Signifyd’s consumer survey, conducted by market research firm Survata, found that nearly half of consumers will endure no more than one bad experience before abandoning a retailer for good. Let’s agree that being called a thief by a retailer counts as a bad experience.
On the other hand, if a retailer accepts the INR claim and it’s not true, the merchant is out of the goods and the revenue it would have received. You can up your fraud protection game, by adding a few things to your to-do list.
Preventing INR Claims
The first step is to make sure your return policy is clear, and your return process is easy. You also want to be clear in your descriptions and presentations of the products you’re selling. Not only does this provide your customers with a better shopping experience, but it also reduces the possibility they’ll be unpleasantly surprised when their order arrives.
Some consumers become frustrated with the work required to return a product and decide to get a refund by claiming the product never came. Being clear about returns and the products you’re selling helps reduce the incidence of unhappy customers who suddenly feel entitled to game the system.
There are also ways to challenge an INR claim, of course. Finding photos on social media of a customer with a product they claimed they never received, for instance, is fairly strong evidence that the item was received — as is a customer’s signature accepting the order. (It happens.)
Dealing with INR claims will never be pleasant, but with some forethought, it can become much less of a chore.