Online shopping has surged amid the pandemic, and what should be a boom for eCommerce has been tempered by the dramatic rise of fraud. This webinar looks at how much fraud is really costing merchants and what companies can do about it. Here's what was covered in the webinar: - How much fraud is really costing merchants by looking at all aspects of fraud detection and prevention, including fraud rates, impacts, and other latent challenges - What steps companies can take to stop fraud while not increasing the risk of denying legitimate transactions

1. E-Commerce Fraud:
It's Costing Merchants
More Than They Think
MRC Webinar Wednesdays
Matt Haroldson
SVP, Strategy & Development
#WebinarWednesdays

2. 1
Introductions
2
State of eCommerce
3
The Collateral Damage of
Mismanaged Fraud
6
Best Practices:
How to Manage Fraud
Wholistically
5
Questions
2 Vesta | Confidential & Proprietary
Contents

3. 3 Vesta | Confidential & Proprietary
Introduction
Matt Haroldson
SVP, Strategy & Development
Vesta Corporation
Matt.Haroldson@trustvesta.com
+1 503.970.4516
TrustVesta.com

4. Vesta is a fraud prevention platform for online purchases.
We drive the cost of fraud to zero, assuming 100% of the
cost of fraud for transactions our platform approves.
Who is Vesta
Vesta | Confidential &
Proprietary
4

5. eCommerce Fraud: It’s Costing Merchants More Than They Think
The Current State
of eCommerce

6. Globally We Are Seeing Seismic Shift In Consumer
Shopping Behavior
Vesta | Confidential & Proprietary
Millions of
New Online
Shoppers
Acceleration
of New Use
Cases in
Different
Industries
Growth of
M -
Commerce
Consumers
increasingly
demand
seamless
experiences
“Massive wave of consumer using digital
services for the first time”
“Food Delivery, Media & Entertainment
Logistics, wallets, marketplaces,
remittances, BNPL ”
“Mobile first generation”
“Seamless experience”

7. 7 Vesta | Confidential & Proprietary
CNP Fraud Remains an Issue
$6.5T
Global E-comm
Transactions
by 2025
$130Bn
Global Card Not Present
Fraud Loss
by 2023
21%
Increase in Attacks
in 2021
$331Bn
Revenue Lost
Preventing Fraud
Source: cfodive.com| wsj.com | Nilson Report | Juniper Research

8. 8 Vesta | Confidential & Proprietary
Source: arkoslabs.com
In 2020, CNP fraud cost companies $35.54B globally

9. Vesta | Confidential & Proprietary
Maximize Approvals or Fight Fraud?
Merchants feel forced to choose.
Rejecting good
transactions
“I am leaving revenue
on the table”
High Fraud
Chargebacks
“I am taking on
too much risk”
Reactive
Tools
“It is hard to detect
accurately and timely”

11. 11 Vesta | Confidential & Proprietary
Source: SapioResearch
Lost Revenue
False Declines
Friction
Abandonment
Realized Fraud
Operational Costs
Fraud detection
solutions
Direct Support
Tarnished Brand
Reputation
• Merchants are projected to lose $443
billion in false positives by the end of
2021

12. 12 Vesta | Confidential & Proprietary
Source: SapioResearch
Lost Revenue
False Declines
Friction
Abandonment
Realized Fraud
Operational Costs
Fraud detection
solutions
Direct Support
Tarnished Brand
Reputation • Abandoned shopping carts — too much
friction at the checkout
• 42% of millennials said they would
conduct more online transactions if
there weren’t so many hurdles to
overcome
• 47% of consumers will immediately
search for another site if they encounter
an issue making a purchase

13. 13 Vesta | Confidential & Proprietary
Source: SapioResearch
Lost Revenue
False Declines
Friction
Abandonment
Realized Fraud
Operational Costs
Fraud detection
solutions
Direct Support
Tarnished Brand
Reputation
• Stolen goods and services
• Chargeback fees

14. 14 Vesta | Confidential & Proprietary
Source: SapioResearch
Lost Revenue
False Declines
Friction
Abandonment
Realized Fraud
Operational Costs
Fraud detection
solutions
Direct Support
Tarnished Brand
Reputation
• System and fraud tools
• Administrative

15. 15 Vesta | Confidential & Proprietary
Source: SapioResearch
Lost Revenue
False Declines
Friction
Abandonment
Realized Fraud
Operational Costs
Fraud detection
solutions
Direct Support
Tarnished Brand
Reputation
In-House Fraud Administration
• Manual reviews
• Chargeback recovery
• Data science system training and
sustainment

16. 16 Vesta | Confidential & Proprietary
Source: SapioResearch
Lost Revenue
False Declines
Friction
Abandonment
Realized Fraud
Operational Costs
Fraud detection
solutions
Direct Support
Tarnished Brand
Reputation
Tarnished Brand Reputation
• 1 bad experience leads to lost
customers- More than half never return
• Being flagged by card brands

18. 18 Vesta | Confidential & Proprietary
Best Practices
Understand your
fraud and
acceptance rates
Measure against
industry
benchmarks
Focus
on transaction
acceptance and
fraud detection
Implement
strategic, not
stringent rules
during checkout
Employ low-friction
authentication
Implement return
and refund policies
that minimize
friendly fraud
Leverage device
and behavioral data
intelligence
Use manual checks
& challenges
sparingly, to reduce
false positives
Integrate machine
learning solutions
to improve speed
and decisioning

19. 19
Optimizing Acceptance & Fraud Rates
%
Fraud
Risk Level
Vesta | Confidential & Proprietary

20. 20 Vesta | Confidential & Proprietary
Ex. Matt’s Shoe Company
Low Acceptance High Fraud Balanced
Monthly Revenue Oppty $5,000,000 $5,000,000 $5,000,000
Acceptance Rate 90% 98% 97%
Chargeback Rate 0.20% 1.25% 0.30%
Realized Revenue $4,500,000 $4,900,000 $4,850,000
Direct Chargebacks $10,000 $62,500 25,000
NET $4,490,000 $4,837,500 $4,835,000
Direct Cost Impacts
Chargeback Management
Fees & penalties
Adjacent costs & Admin
Indirect Cost Impacts
Customer Lifetime Value
Brand Image

21. 21 Vesta | Confidential & Proprietary
Benefits of a Well-Managed Fraud Program
Higher Revenue
Reduction of false positives
Increased approval rates
More return
customers and greater
customer lifetime
value
Simplified & friction-
free customer
experience
A better view and
understanding of your
customers
Increased
performance
Continually improving
fraud solution
Brand strength
Brand advocacy

22. 22 Vesta | Confidential & Proprietary

23. Zero Fraud. Zero Liability. Guaranteed.
www.TrustVesta.com