False Declines Biggest Threat to Merchants during Holidays: Report

Next week, as the calendar turns over to November, consumers’ minds will begin to turn toward the holidays. E-commerce merchants, on the other hand, have been thinking—and worrying—about them for some time now. And, while there is a lot for them to worry about during the 2017 holidays from a fraud perspective, there are some reasons for good cheer besides the imminent arrival of an overgrown red-suited elf, according to antifraud technology provider Riskified in an aggregated analysis of its e-commerce customers.

While holiday revenue for e-commerce merchants will rise 13 percent from $69 billion in 2016 to $78 billion this year, Riskified said the average order is 55 percent less likely to be fraudulent than it is the rest of the year. While the average order value climbs steadily throughout the season from Black Friday ($178.68) and Cyber Monday ($165.04) to New Year’s Eve ($191.02), the fraud rates on those days will be 74, 70 and 69 percent lower, respectively, than they are on an average day during the rest of the year.

According to Riskified’s analysis, revenue lost to declining good orders is a far bigger threat this year than actual fraud. Because merchants have less time to deal with a much greater volume of orders than usual, Riskified said fraud decisions will be less accurate. While the company estimates that 60 percent of declined orders are actually legitimate on an average day, 80 percent of declines are legitimate during the holiday season.