Executive Briefings

How to Prevent Fraud in Buy Online, Pickup in Store

As the retail landscape continues to evolve, businesses are finding innovative ways to appeal to consumers' need for online convenience while still attracting brick-and-mortar traffic. How? One solution is to implement buy online pickup in store (BOPIS), which allows shoppers to reserve products online for easy pickup at a nearby location.

It's a proven way to engage shoppers online, attract in-store shopping and drive impulse purchases. In fact, the National Retail Federation reported that 32 percent of omnichannel retailers adopted buy online pickup in store in 2016.

The downside? Fraudulent transactions are approximately three times more likely to occur, challenging omnichannel retailers to take proactive steps to combat theft and profit loss. While BOPIS offers convenience to customers, it also leaves major loopholes for fraudsters:

The Multiple Identities Criminal

Many retailers use separate systems for internal and online purchases that don’t communicate with each other, limiting a retailer’s ability to verify customer identities and pinpoint fraudulent orders. For example, an in-store employee may have no way of knowing that a customer bought 50 identical items, with 50 different identities and plans to pick up at a variety of retail locations.

The Reverse Engineer Criminal

Additionally, savvy criminals reverse engineer the fraud detection systems that retailers use and work around review thresholds (i.e. purchasing items below $499 if $500 is the review threshold). Fraudsters also limit purchases according to known retailer velocity thresholds (i.e. purchasing less than 10 items at once) to fly under the radar of security checks.

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It's a proven way to engage shoppers online, attract in-store shopping and drive impulse purchases. In fact, the National Retail Federation reported that 32 percent of omnichannel retailers adopted buy online pickup in store in 2016.

The downside? Fraudulent transactions are approximately three times more likely to occur, challenging omnichannel retailers to take proactive steps to combat theft and profit loss. While BOPIS offers convenience to customers, it also leaves major loopholes for fraudsters:

The Multiple Identities Criminal

Many retailers use separate systems for internal and online purchases that don’t communicate with each other, limiting a retailer’s ability to verify customer identities and pinpoint fraudulent orders. For example, an in-store employee may have no way of knowing that a customer bought 50 identical items, with 50 different identities and plans to pick up at a variety of retail locations.

The Reverse Engineer Criminal

Additionally, savvy criminals reverse engineer the fraud detection systems that retailers use and work around review thresholds (i.e. purchasing items below $499 if $500 is the review threshold). Fraudsters also limit purchases according to known retailer velocity thresholds (i.e. purchasing less than 10 items at once) to fly under the radar of security checks.

Read Full Article