Cart Abandonment: The Unfortunate Result of Poor Fraud Prevention Solutions

Cart Abandonment: The Unfortunate Result of Poor Fraud Prevention Solutions

by July 6, 2021

Inaccurate fraud prevention solutions can have a negative impact on your  cart abandonment rates. Learn how to prevent this problem from affecting your ecommerce website.

With card-not-present (CNP) fraud on the rise, many merchants are seeking out fraud prevention tools to protect their businesses from being affected. The problem is, many of these tools use rigid rulesets to identify fraudulent transactions and often end up declining legitimate orders from going through.

Inaccurate fraud solutions can end up causing more harm than good, and often result in a negative impact on your website’s cart abandonment rate. In this article, we’ll explore how cart abandonment can be influenced by fraud tools, and what you can do about it as a merchant.

What Exactly Is Cart Abandonment?

As the name suggests, cart abandonment occurs when a customer in your online store fails to complete the purchase of items they have in their virtual shopping cart.

Cart abandonment is one of the most costly problems that ecommerce merchants face. The average cart abandonment rate across all industries sits just below 70% — meaning that on average, 7 out of every 10 potential customers that visit your store and add an item to their cart will bounce without ever completing a purchase.

The likelihood that they’ll return to complete that purchase is very low, which is why it’s so important for your checkout experience to be as frictionless as possible.

How Do ‘Fraud Solutions’ Impact Cart Abandonment?

Merchants are doing everything they can to prevent fraud from impacting their bottom line, but in some cases the tools that they’re using to stop fraud attacks end up turning away legitimate customers.

Many fraud prevention platforms rely on pre-determined rules that flag orders as fraudulent if they don’t meet a specific criteria. For example, orders that are placed with a domestic billing address but an international shipping address might be flagged as fraudulent, even if the order is placed by a legitimate customer.

Once an order is declined the first time, it’s highly unlikely that the customer will have the patience to contact the merchant to complete the transaction. In many cases, the individual will opt to purchase the same product from a competitor instead, a situation that could be especially crippling for small businesses.

While these rulesets are intended to filter out illegal transaction activity, they often end up impacting your actual customers and causing false declines.

How Can You Prevent Your ‘Fraud Solution’ From Impacting The Checkout Experience?

There is simply no way to circumvent the need for fraud protection. However, you’ll need to implement a method that is as accurate as possible in order to prevent false declines from tanking your cart abandonment rate.

A common mistake entrepreneurs make is utilizing a blanket strategy in order to help prevent online fraud. To clarify, let’s assume that many fraudulent transactions come from a particular region in China.

Blocking sales to China as a whole is inefficient and could prove to be fairly costly, as this could potentially eliminate thousands of purchases. Instead, certain criteria should be taken into consideration in this case, such as whether or not that customer has purchased from China before, the size of the overall order, etc.

Fraud solutions that use artificial intelligence and machine learning to adapt to the customer purchase behavior on your website can offer better results and reduce false declines, but inaccurate AI/ML systems will often fail for a variety of reasons. Machine learning is not a standalone solution and should not be expected to perform as one. Leading fraud systems leverage a wide range of technologies to inform a transactions risk score, including:

  • Consortium data
  • Graph link analysis
  • Advanced identity authentication (3DS, SCA, and biometric authentication)
  • Silent pending

Vesta’s proprietary and adaptive graphical database draws connections in real-time from 2 trillion data points to approve more than 97% of transactions. Our fraud solution offers the best protection without having sacrifice legitimate sales and damaging your website’s checkout experience.

Prevent Cart Abandonment With The Right Fraud Solution

Merchants needs to strike a balance between managing the risk of fraud and providing an optimized customer experience on their website. If you’re noticing your cart abandonment rate is unusually high after implementing a new fraud detection tool, it may be time to look into a new solution that will more accurately identify fraudulent transactions.

The most successful merchants are ones that use a fraud platform that integrates seamlessly into customer experience of a site. Adding friction to the checkout process will result in a high cart abandonment rate, so it’s critical that your business identifies an scalable solution that can meet your specific business’ needs.


First appeared on Vesta’s Blog on eCommerce Fraud.