FRAUD PREVENTION FOR The AUTOMOTIVE PARTS AND ACCESSORIES MARKET
E-commerce can drive huge sales growth for auto parts retailers — but chargebacks will put the brakes on high performance if fraud isn't controlled.
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Why is the auto parts industry considered high-risk?
There are two key reasons:
Fraudsters follow the money.
Although some lone thieves use stolen credit card data to purchase products for themselves, the vast majority of card-not-present (CNP) fraud comes from organized criminals intent on reselling automotive products on a large scale.
Auto parts are high-value merchandise.
Products can bridge multiple highly popular categories, including:
electronics
apparel
audio components
hobbyists
etc
There are also many secondary marketplaces, middle markets, and aftermarkets:
auctionsites
Craigslist
online marketplaces
Because criminals can quickly turn stolen items into easy cash, the auto parts industry is an enormously appealing target for CNP Fraud.
This may come as a surprise, since the size and quantity of auto parts can complicate resale logistics:
storage
handling
listing
shipping
etc
But fraudsters work in teams and selectively target certain types of auto parts.
The Auto parts resale market
Fraudsters can make money by selling either to middlemen or directly to the aftermarket.
Which products are highest risk?
Fraudsters look for in-demand products that are easy to resell. The most popular targets include:
Items for the top-selling makes and models
Small electronic items and accessories
Luxury brands
WHEELS, RIMS, Tires
Tune-up parts
The typical fraudulent auto parts order in 2020 had an average value of $1,900 ...
... almost 2X higher
than the average fraudulent order in general retail markets.
How do I know if my Auto parts business has fraud issues?
Fraud prevention is a numbers game. The most important key performance indicators (KPIs) to watch are your chargeback rates and decline rates.
If your domestic chargeback rate is more than 0.25% and/or your decline rate is more than 1.5%, you have a fraud problem.
more than 0.25% chargeback rate
and/or
more than 1.5% decline rate
=
You have a fraud problem
chargeback rate what is this?
Your chargeback rate (also called a chargeback ratio) is the number of chargebacks compared to your overall transactions for a given month.
More chargebacks = a higher chargeback rate.
chargeback rate how is it calculated?
Each card issuer calculates this ratio slightly differently.
Visa divides the current month’s number of chargebacks by the current month’s number of transactions. MasterCard divides the current month’s number of chargebacks by the previous month’s number of transactions.
What fraud prevention best practices do i need to know?
Focusing on these elements will help improve the outcomes of your fraud prevention strategy:
Keep fraud rates under target thresholds.
Don't let your fraud strategy negatively impact your online shopping experience.
Aim to maximize approval rates and minimize false decline rates
Look for a fraud solution that is easy to implement.
Look for a fraud solution that is also easy to manage.
Predictable costs will be easier to budget.
Your fraud strategy should have the capacity to deal with sales peaks.
Look for a fraud partner with the expertise to deal with changes in fraud patterns and data breaches.
You need clarity and transparency in your fraud metrics.
The right processes will give you the peace of mind to focus on achieving your core business goals.
Fraud prevention strategies must be aligned with businesses goals. For this to happen, you need a solution that enables you to manage performance, not complicated features.
For more than 15 years, ClearSale's comprehensive fraud solutions have delivered results that matter: the highest approval rates, lowest chargeback rates, and top-notch customer service in more than 160 countries.
Customers continually tell us how ClearSale makes their lives easier by increasing sales, controlling fraud, and improving their customer experiences.
If you believe you have opportunities to improve your business in any of these areas,
ClearSale might be your partner of choice.
About the online automotive parts and accessories market
Standard gasoline and hybrid engine automobiles are one of the most common modes of transportation worldwide, and with their use comes a lot of maintenance.
This makes automotive parts and accessories a steady industry, growing at the same rate as the overall retail industry.
Transactions in the industry are usually $100 or more:
U.S. auto parts e-commerce revenue (in billion U.S. dollars)
Overall retail e-commerce revenue (in billion U.S. dollars)
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“ClearSale allows us to focus on running a business instead of fighting fraud. We were skeptical, but ClearSale has proved themselves time and time again. We couldn’t be happier with their performance.”
“We decided to integrate ClearSale and the impact of adding was almost immediate. The commission is worth it, as more sales are approved.”
Be the leader to change your business
Combine ClearSale solutions with your own business knowledge so you can maximize your focused expertise.
Increase sales and delight your customers while eliminating fraud and chargebacks before they happen.
ClearSale is the largest and only solution with the scale, flexibility, expertise, and experience to support any merchant anywhere.
