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Retailers have got COVID-19 problems, but fraud shouldn’t be one

The coronavirus pandemic has led to more Australians filling their shopping bags from behind a screen, but a proliferation of COVID-19-themed online scams are pushing customers away from shopping online. What’s the solution?

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This May, Australia’s consumer watchdog issued a warning over coronavirus scams after people handed $700,000 to fraudsters in the months since the pandemic began.

From tests-by-text scams to fake sites purporting to sell surgical masks, the COVID-19 crisis has netted fraudsters huge rewards by playing off against consumers’ biggest fears: their health and their finances. Scams like these not only hit consumers’ purses but contribute to a climate of anxiety and mistrust around shopping online.

As Australia starts to slowly emerge from lockdown, retailers will face an uphill struggle to recoup the costs of these lost months, while encouraging consumers to continue using their online platforms.

One thing for certain is that while retail footfall has hit an all-time low, consumer appetite for certain products and services has spiked significantly.

For anyone trying to set up a home gym recently, trying to purchase the necessary weights and equipment has been far from easy. According to our research survey entitled ‘No second chances! Why the e-commerce industry needs to make anti-fraud protection a priority’,  some gym merchants have reported sales increases by as much as 900 percent.

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Products to mitigate the tedium of homebound social distancing — from books to games and puzzles — have all seen demand increase.

Other areas of note include alcohol: one Melbourne alcohol merchant reported a 200 percent spike in sales. And while many are left in lockdown with the kids, it should come as no surprise that sales of baby and childrens’ products have experienced rises of more than 90 percent in Australia.

However, as consumers increasingly shifted their shopping online, cybercriminals have been ready to exploit interest in the COVID-19 pandemic as a means to steal money and personal information.

According to Scamwatch, fraudsters have created fake online stores that claim to sell snake oil products, such as self-testing kits, cures or vaccinations for COVID-19, some of which appeared on popular merchants such as eBay and Amazon. Meanwhile, brands such as Woolworths found their brands hijacked by fraudsters claiming to offer ‘freebies’ or assistance packages either via phishing emails and SMS.

Although the retailers are the unwitting victims in these cases, they themselves are often blamed when a consumer finds themselves to be the victim of a scam or in possession of a fake product. Our research into the Australian market found that Australians are the most unforgiving when it comes to online fraud, with more than three-quarters of those surveyed saying they would not return to an online retailer after falling victim to an online scam.

ClearSale’s research also revealed just how highly Australians prize their security while shopping online — with 90 percent saying they needed to feel secure at all times. Sophisticated fraudsters know that people are more likely to fall for scams if they seem to come from trusted sources, meaning well-known brands like Woolworths and Telstra can often be in criminals’ firing line.

Given the numerous headlines recently about stores like Target either closing down or downsizing, you can forgive retailers for being cautious with their budgets until this financial year’s end.

However, the proliferation of these scams present a strong reminder that cyber and data security should not be under the budget chopping block. Our research suggests that customer service and fraud prevention teams in the Asia Pacific are still largely relying on manually screening, averaging 30 percent of e-commerce orders.

Yet given the rise of fraudulent attacks, investing in automating these screenings would not only make the process more efficient but take some of the burden off these already-pressured teams.

Choosing an anti-fraud anti-fraud software provider that protects customers and suits their behaviour is essential. Communicating these security practices, especially at the point of checkout, adds a layer of reassurance to any customers who are either new to e-commerce or unsure about their online safety.

Meanwhile, online merchants should regularly review the items on offer, thereby avoiding the trap of accidentally listing fake products or fraudulent sales. While this requires more time and investment, this will protect shoppers and ultimately help keep their trust. If buyers are scammed or harmed by faulty products they buy through a marketplace, the blame will naturally fall on the merchants themselves.

Admittedly these are tough times for Australia’s retail industry, but as the state governments look to slowly open up businesses, there is some hope. Saying that, with the coronavirus showing no signs of dissipating worldwide, it’s highly unlikely COVID-19 scams will vanish any time soon.

As such, retailers can safeguard themselves against these and any potential future outbreaks in Australia by putting their money where their mouth is. Failing to invest in robust anti-fraud measures leaves retail owners vulnerable to both scams and a loss of future business from affected customers. It’s this potential loss that could ultimately cost the retailer more than being scammed in the first place.

Rafael Lourenco is executive vice president and partner at ClearSale