Ecommerce False Declines & Consumer Behavior

An executive snapshot for ecommerce leaders

With the ecommerce shopping surge comes a wealth of opportunity for fraudsters. They’ve become more sophisticated, leveraging multilevel crime rings and AI bots to mimic valid users. Not only do ecommerce businesses have to protect themselves and their customers from fraud, but they also struggle to distinguish between fraudsters and valid customers. At the same time, businesses can’t be too strict and turn away good orders through false declines.

This balance of fraud protection and establishing trust in the customer’s buying journey presents a challenge. When a customer’s order is falsely declined, that trust is broken.

The Ecommerce Dilemma

Today’s companies have to focus on customer experience (CX) to attract and maintain a loyal customer base. Among the many factors that impact CX is fraud prevention.

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That presents online businesses with a dilemma. They need to bring their fraud prevention “A” game to provide a superior customer experience without making it a hassle.

Businesses Rely Heavily on Fraud Filters

Just about every ecommerce platform comes standard with fraud filters that use transaction screening and algorithms to fight fraud. While fraud filters are useful, they tend to be overly strict and result in false declines — when a customer’s valid order is declined because the business mistakes it as fraudulent.

How Common Are False Declines

How False
Declines Impact Businesses

Customers don’t like being declined. Many will never shop on a site again after they’ve experienced a false decline. Even worse, some will take their complaints to social media, potentially creating a negative reputation for the company.

That presents online businesses with a dilemma. They need to bring their fraud prevention “A” game to provide a superior customer experience without making it a hassle.

False declines are costly

When you factor in the customers who won’t re-attempt to make their purchases, those who will never shop on your site again, and customers who complain on social media, you can see a significant cost.

In financial terms, it’s safe to assume that every $1 in false declines equals a loss of $13.

False Declines Consumer
Trust and CX

False declines also tear away the foundation of consumer trust because they deliver the opposite of what today’s customer wants — personalization — 71% of customers expect to have personalized interactions with companies they frequent.

Earning (and Keeping) Ecommerce Consumer Trust

Businesses must balance fraud prevention and order approvals while, at the same time, establishing and maintain consumer trust. This highlights the need for a customer-centric approach, which can include:

Social commerce

Allows brands to align content, influencers, advocacy and community with customer needs, wants, and values.

Chatbots and conversational apps

Uses natural language processing and custom responses, leveraging real-time and historical customer behavior and purchasing data.

Less friction

Limits the steps consumers have to take to successfully make a purchase.

Consumer trust

Is essential for loyalty and involves:

Becoming familiar with customers through data
Demonstrating to customers that they belong
Addressing Gen Z and millennial customer needs
Focusing on providing a superior user experience

Another important trend that has become especially obvious of late is disparate consumer behavior based on age.

Download the full report to learn what we discovered about generational shopping habits and more:

  • How different groups of consumers perceive fraud and false declines
  • Strategies for navigating the age of customer experience
  • How ClearSale helps prevent fraud, chargebacks and false declines

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