During the early days of online commerce, fraud was a rarity. And when it happened there was very little you could do about it. So you just buried the cost and treated it as a once off hit. But then it happened again and again and again. And the costs started to add up.
Even the companies who treated fraud seriously really only had one real way to prevent fraud; throw bodies at it. Almost 25% of all transactions would be put in front of a person for a quick eyes on review and unless something glaringly obvious popped out, the transaction would be approved. Almost 10% of the transactions that went through this process still turned out to be fraudulent. It just isn't a good way to prevent fraud.
These days the eCommerce industry is booming and growing at unheard of speeds. The potential is staggering, these days online commerce still only makes up 5% of total global commerce so its going to keep growing and expanding for a long time yet. The problem is that the rate of successful fraud incidents is growing faster. Nearly twice as fast.
So the strategy of just treating fraud-related losses as a cost of doing business is unsustainable. The strategy of just throwing transactions into a manual review process is going to get more and more expensive as the number of transactions you have to process gets larger and larger and the number of bodies you have to hire to review the transactions increases. As the number of staff goes up, inevitably the wages and therefore the calibre of the staff goes down, leading to the rate of fraud incidents going up. It's a vicious circle.
Fraud is now such a sophisticated industry and is only going to become a bigger and bigger issue and a far more expensive problem. It's such a profitable industry for those with the expertise and its even replacing drug running as a primary source of income for criminal gangs. It's the next great hurdle that commerce is going to face before the vision of true online ecommerce on a large scale becomes a reality.
Until fraud prevention can combat these new threats at a cost thats affordable and accessible for ecommerce merchants at every scale, fraud will continue to be a massive cost burden for those selling online. At Trustev, we have a new approach and a new set of technologies that we genuinely believe are going to redefine how fraud is detected, monitored and eliminated. Our goal is to set ecommerce free by removing the built up, legacy layers of old and outdating process that make online shopping and sharing the complicated mess they are today. We want to help connect merchants and their customers and let them do business online, the same way they do offline.
It's a big ask, but we're ready for the battle of our lives. Watch this space.