Fraud in electronic commerce in Latin America
Being a global hotspot for e-commerce retailers thanks to increasing internet penetration rates as more and more consumers come online, it has also become an opportunity for cybercriminals to scam customers if they don't They take the necessary precautions.
Mexico is the country with the highest risk of eCommerce fraud, compared to countries like Brazil and Russia, since the growth of this crime is 72% per year, which represents an increase three times faster than the same electronic commerce.
Although there are several similarities between other countries and Mexico when carrying out some type of fraud, countries like Argentina have exactly imitated eCommerce fraud in Mexico, as they always seek to obtain products that are easy to sell, have high demand and high costs; that is, products that can be easily sold and that bring the fraudster a good profit.
Within Latin America, Brazil leads e-commerce sales, with 36.3% of the market, and Mexico is close with 24% ; In addition, it has also experienced an annual growth rate of e-commerce retail sales of 16.3%, surpassing Brazil's growth rate of 12.2%.
“With more data breaches, smarter scammers, and new payment alternatives, online retailers need to know their risks, especially considering that fraud has the potential to cost merchants more than 7.5% of their current revenue.” commented Victor Islas, Country Manager of ClearSale Mexico.
According to the study The True Cost of Fraud in Latin America 2021, 34% of fraud attempts are through mobile browsers, as retailers and companies offering mobile commerce increased from 69% in 2019 to 87% in 2021. .
These figures are alarming since during the Good End in Mexico , the states with the highest fraud attempts were the State of Mexico, Mexico City, and Veracruz. and Jalisco.
Clearsale , in addition to identifying these states with the highest fraudulent activity in e-commerce, also found that some of the products most sought after by fraudsters are high-end cell phones, 40 to 50-inch screens, video game consoles, tennis brands, alcoholic beverages, perfumes and washing machines.
As 2022 approaches, and global online sales are expected to reach as much as $4 trillion by 2025, merchants need to start innovating their security to stay one step ahead of fraudsters.
For this reason, we share some actions that you can take into account within your company to prevent your online business from being affected:
Currently, Mexico has the highest percentage of online fraud in the world with 3%. In the first quarter of 2021 alone, the Condusef registered 628,132 chargebacks in debit card operations in the country, which represented more than 15 million dollars (323 million pesos) that online businesses had to absorb.
Chargebacks are expensive, as for every dollar ($20 MXN) charged back, sellers lose $2.50 ($55 MXN) in time, fees, physical goods, and shipping costs, which can bring your online business to a halt.
Avoid false positivesRejecting all suspicious transactions can be counterproductive for your company, since according to a report by Aite, losses due to false positives are expected to rise to $443 billion in 2021.
But false positives more than value lost during a purchase can also lead to lost customers, as at least 32% of customers are falsely declined and decide not to buy from that merchant again.
Have fraud prevention solutions
Merchants should invest in implementing in-house or outsourced fraud prevention solutions to help, because the fraud prevention tools built into a shopping cart platform do not always correctly detect any fraud attempt.
This is why one of the best ways to do this is by employing a fraud prevention strategy that uses both a manual and automated two-pronged approach that uses computer algorithms, custom rules, and proven statistical techniques to analyze current and historical data, fraud statistics across all industries and transactional information.
Author: Victor Islas
More than 12 years of international experience in digital business transformation, focus on Latam and the adoption of processes, cutting-edge technology, means of payment and fraud prevention for eCommerce.