Industry insights by ClearSale
Your customers are always on the lookout for the latest and greatest electronic goods.
Unfortunately, fraudsters are looking for your products, too.
We are surrounded by electronics — from the computers on our desks to the smart phones in our pockets to the thermostats in our homes to our data in the virtual cloud. — Joe Kaeser, Siemens CEO
Expensive and popular items are always hot targets fraud — from GoPros to Apple Watches, smartphones to wireless headphones.
New technology is always in demand, and customers will pay high prices for the latest releases.
Electronics can be resold at a price close to the purchase price – enabling fraudsters to quickly turn stolen goods into cash.
Electronic devices are easy and inexpensive to ship and store for resale.
If your domestic chargeback rate is above 0.25%, you have a fraud problem.
Fraudsters are smart, and they can get quite cutting-edge with their schemes. Therefore you must also be smart and stay on the lookout for these card-not-present (CNP) fraud patterns.
The fraudster, who has purchased stolen credit card information on the black market, lists a popular electronics item (such as a computer or a mobile device) for sale on an online marketplace such as Craigslist. When an unsuspecting consumer pays the fraudster for the item, the fraudster uses the stolen card information to purchase the item from a retailer and ship it to the consumer. The fraudster pockets the money and both the retailer and the consumer become fraud victims.
Fraudsters go to retail stores, find high-priced items, and place fake barcodes on top of the actual barcodes to artificially lower the product cost. The fraudster purchases the item at the reduced cost, and then resells it online for at or near the actual price.
Fraudsters purchase a consumer’s information on the black market and take over that consumer’s mobile phone account. The fraudster then contacts the phone carrier and poses as the consumer to purchase new phones at low or no cost through the carrier’s subsidized purchase program. The fraudster can now quickly sell the new phones for a profit.
The fraudster places an order and initially sets the delivery address to match the billing addresses. Once the order is approved, the fraudster contacts the merchant and changes the delivery address. Alternatively, if the fraudster is located in a country known for fraud, the fraudster might use the delivery address for a freight forwarder. This can mask the true destination of the package and prevent the merchant’s fraud filters from flagging the order as suspicious due to the country risk.
Fraudsters know that many electronics retailers won’t be prepared to handle big spikes in sales volumes during the holiday shopping season, particularly Black Friday and Cyber Monday. They’ll use this opportunity to step up their testing of merchants, and once they find a chink in the merchant’s armor, they’ll attack with full force.
Fraudsters are looking for the vulnerabilities in your fraud prevention program. Your customers are looking for smooth online shopping experiences. Keep both goals balanced.
As a consumer electronics merchant, there are several steps you can take to reduce your e-commerce fraud risk.
Pay attention to your sales patterns. Fraudsters are smart, and they’ll probe your defenses with a series of small transactions so they can learn where your limits are on the types of transactions you’ll automatically approve. If you’re not proactively looking for fraud, you’ll never notice these odd small purchases that can indicate you’re about to be hit with a larger fraud attack.
If you wait to report a fraudulent transaction until the order has processed, it’s too late — you’ve already lost money on that order, and you’ll have a harder time stopping that fraudster the next time. This is because once a fraudulent order is approved, many online systems incorrectly recognize the fraudster as a legitimate customer. This makes it harder to flag and stop any future fraud attempts by that fraudster. Instead, identify and flag suspected fraud attempts immediately so you can review the transactions, verify the fraud, and minimize your current and future losses.
Small, lightweight items (such as GoPros and iPads) are easier to resell and therefore will be a bigger target for fraudsters than large, heavy items (such as printers and plasma televisions). Establish risk profiles for each product category you sell, so you know which orders you need to examine more carefully.
Because shipping scams are common in electronics, monitor changes made to delivery addresses after the order has been approved. If packages are being rerouted, ask carriers to return packages to you when an in-transit reroute is requested.
Sometimes fraud patterns only become visible when you’re looking at the big picture. For example, an order of one laptop to a home on Cherry Hill Drive doesn’t raise any red flags. But when you see that ten homes on Cherry Hill Drive have each purchased a laptop within days of each other, you know that something is afoot. If your fraud program isn’t reviewing every transaction, you won’t be able to spot these patterns and you’ll fall victim to the fraud attack.
There are other ways you can lose money to fraudsters. Using a fraud program that is too strict can increase false declines.
False declines occur when your fraud program automatically declines any order that is flagged as “possibly” fraudulent without first verifying the fraud.
But most of these “possible” fraud transactions are legitimate orders. Not only do you lose the revenue from the declined sale, you also anger your customer. Unhappy customers complain loudly on social media, and many will never shop with you again.
If your decline rate is above 1.5%, you have a problem with false declines.
False declines cost you revenue AND customers. Be extremely wary of any fraud program that claims to “make your life easier” by auto-declining all suspicious orders. Your program is probably creating a false decline problem for you.
Here are three common scenarios that indicate a transaction is not fraud:
After all, fraudsters don’t need warranties on a product they intend to resell.
It’s nearly impossible for a civilian fraudster to retrieve a package from a military post office.
It’s harder for a fraudster to make a purchase using a mobile device than on a desktop.
If your fraud program automatically declines all suspicious orders and doesn’t look for mitigating factors like these, good orders are probably being turned down – which means you are losing revenue, losing customers, and hurting your business reputation.
ClearSale is a leader in the consumer electronics industry, helping top retailers identify even the most subtle instances of fraud. We deliver the highest approval rates in the industry, and we virtually eliminate chargeback costs — all in one integrated platform.
Our clients see impressive results after joining forces with us, including:
reduction in false declines
decisions within 24 hours
drop in chargeback ratio
We know the right strategies for beating electronics fraud – and we provide a seamless purchasing experience for your customers.
For nearly 20 years, ClearSale has been innovating the e-commerce fraud protection industry.
We know the electronics industry, and we know how to keep your customers and your business safe.
99% customer retention rate
150+ countries accepting orders every day
Although our results speak for themselves, here’s what just a few of our clients had to say about the ClearSale experience.
"I have always received immediate response and minimal fraud rejection -- which leads to increased sales."
"Clearsale has a great fraud protection using their algorithmic matching of potentially fake orders, and will scan them as they come up and reject them if they are suspected as fraud."
"Quick fraud detection on all orders. Ease of use on the platform. Never had a chargeback."
"Their customer service is the best. They are quick to respond and answer question regarding orders that are denied."
"Clear sale are very good, the orders get approved quickly ,which is great so we know we can confidently send out the goods. payment confirmation usually happens in 2-3 hrs. once that happens we know we are covered."
"The product is great. We've never had a complaint from day 1. The setup was easy. And the continued service has been exceptional. With a product like this you want it to work behind the scenes without ever thinking about it. That's clearsale. It does exactly what it is supposed to do and never causes us troubles."
"I don't have to spend time researching orders to see if they are fraud or not. I love that clearsale backs up their approvals with a money back guarantee if the order turns out to be fraud."
"I love that it takes the stress away from me worrying about fraud charges."
"We are in the Durable Medical Equipment supply industry and we use Shopify as our shopping cart. With Covid 19 we have seen a tremendous increase web traffic and online purchases. Prior to Covid 19 we had a number of fraudulent transactions that led to multiple investigations on Local, State and Federal levels all of which produced no returns only because the crooks were faster. This cost us in..."
"ClearSale offers a great service that comes with a complete peace of mind. Their staff are easy to reach and pleasant to deal with. I particularly enjoy that I no longer have to spend hours a day investigating customers who purchase from our online store and try to determine if they are legitimate or not. No more rolling the dice with our business. ClearSale also backs up all their..."
"The competitive rates, their quick response to customer service"