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How Covid-19 puts fraud teams centre stage
The pandemic-led shift to ecommerce isn’t going anywhere, and as businesses focus on making online operations safe and sustainable in the long-term, appreciation of fraud teams is growing.
It’s January 2021 - a year on since the start of the Covid-19 pandemic, and whilst no one can be sure what this year will bring, one thing is clear: the increased demand for ecommerce is here to stay.
In 2020 many businesses were forced to rapidly accelerate online expansion. This year, CEO Martin Sweeney predicts that “sellers will have to find long-term solutions to cope with increased volumes and operational changes.”
In August 2020 we conducted our Online Merchant Perspectives Survey, speaking to 1000 fraud professionals from large online merchant businesses around the world about changes in fraud. The results show that the majority of merchants are planning to invest in fraud prevention tools and teams in 2021.
Covid-19 has had a positive impact on fraud operations
At the time of the survey (August 2020), 46% of participants said that the pandemic impact on their business fraud operations was either positive or very positive. Positive could mean they are busier with more volume, and/or that the value of fraud operations is gaining appreciation since the move online.
In 2020 worldwide retail ecommerce sales grew a whopping 27.6%, and in the UK, ecommerce enjoyed its highest online sales growth in 13 years with online spending rising 46%. In early 2021, ecommerce is still operating at well above pre-pandemic levels - last week, giant retailer Procter & Gamble reported a 50% increase in online sales.
Three-quarters of merchants have seen wider perception of the fraud team improve
So, many businesses say Covid-19 has been positive for fraud operations - why else could that be? We think it's because of the impact Covid has had on the wider business perception of the fraud team.
Almost three-quarters of survey participants report an improvement in the wider business perception of the fraud team in the past year. This strongly correlates with the impact of Covid-19 on the business, and supports the idea that as businesses are more reliant on their online operations, fraud teams are being viewed as a more integral function.
Businesses are becoming more aware of growing fraud risks
In our recent Online Merchant Perspectives Webinar, we spoke to industry leaders from CipSoft, Boohoo, Glovo and Flixbus about our survey results. They agreed that fraud risks are increasing with more online transactions, and business members are taking notice.
Nelda Biltauere (Payments & Fraud Manager at Boohoo) agrees that “naturally since online transactions increased due to Covid, so did fraud.” And Marcus Riese (Senior Payments Manager at Cipsoft) adds that “in recent months, many fraudsters have discovered different payment methods and new fraud schemes, so C-level became once again more interested in what the fraud teams are doing.”
Plus, online businesses that experienced growth during the pandemic will start paying more attention to fraud risks, as Florian Jensen (Global Fraud & Payments Director at Glovo) suggests: “as businesses grow, fraud will become more important, as that one percent of fraud that might have been a thousand Euros a month, is all of a sudden a million Euros - that’s a lot of money you are throwing out of the window.”
Fraud team awareness is reaching C-level
Senior roles are more likely to think that the fraud team is seen in a better light. At C-level almost 80% of CFOs, CROs and CTOs report an improvement, with over a third of CFOs reporting a significant improvement. This is really encouraging for fraud professionals who have been working hard to communicate the value of their team to the business.
Krystyna Savotchenko (Fraud & Risk Manager at Flixbus) suggests that fraud teams often have to “fight the perception that fraud prevention damages business” and “educate the stakeholders about the benefits of fraud prevention.” Hopefully, the increase in C-level appreciation will reassure fraud teams, improving overall job satisfaction.
Over 70% of businesses expect their fraud teams to grow in 2021
Over 70% of businesses expect their fraud team to increase in the next year, with none predicting a significant team reduction. This is reassuring for fraud professionals, as even in the worst-hit Travel & Hospitality sector, the overall trend of increasing team size is counter to the global prevailing bad news on jobs and employment.
Against all odds, 2021 is a promising year for fraud teams
If 2020 was the year that kickstarted the ecommerce boom, 2021 is set to be the year that drives investment in online security and fraud prevention. To gain more insight into fraud teams and fraud risks, access the full Online Merchant Perspectives Survey here.