The increasing use of digital channels is expanding around the world. But unfortunately, many users aren’t technologically savvy with the safe use of mobile or online services. Bad actors are all too quick to take advantage of these gaps in security. To help protect these vulnerable customers and their own reputations, organizations need to understand these rising fraud threats.
Just as important, businesses need to understand how consumers perceive online threats and provide assurance that they are safe to do business with.
Consumers wary of doing business with an online service due to security or privacy concerns impact potential revenue. All the efforts to acquire a customer will be for nothing if the consumer abandons the sign-up or onboarding process because of a lack of trust. However, if the process is slow or complex, the result is often the same, as consumers also expect it to be reasonably quick and seamless.
A growing threat
Fraud has a long and troubled history. But now, the tools and capabilities of fraudsters present a whole new level of financial threat. Digital fraudsters can perpetrate their crimes remotely, at scale, and can even automate the process.
According to The 2021 Identity Fraud Study, losses from identity fraud alone totaled USD $56 billion in 2020. The Financial Cost of Fraud Report puts the total cost of all fraud types at USD $5.12 trillion — and that was in 2019, before the pandemic.
The pandemic has accelerated the transition to digital channels. As John Roberts, founder of AO, the online electricals retailer, remarked in May 2020:
The coronavirus crisis accelerated five years of online shopping behavior changes into just five weeks.
With more people going online and more businesses relying on digital channels due to COVID-19, the fraudsters have followed; the Financial Times reports that online fraud has increased by a third in the UK.
Providing trust and safety
While there’s no doubt that organizations need to take measures to prevent fraud, they must also deal with the perception of fraud and creating a positive buying experience. If the consumer has any doubts or concerns, or there are perceived obstacles, it’s effortless to move on to another competitor.
To prevent customer abandonment, organizations need to provide the appropriate trust signals, usability, and quick and effective onboarding that consumers are comfortable with. While the whole site or app plays a role in the buyer journey, it’s the onboarding component that is the moment of truth; during onboarding, the prospect provides sensitive personal and payment information and is most concerned with privacy and security.
Providing an onboarding experience that builds trust instead of creating questions is often the difference between making or losing a sale.
To help organizations understand what consumers are looking for during this vital phase, Trulioo commissioned independent research from Insights Avenue in April 2021 to examine consumer attitudes and behaviors around online security. These insights were recently published in our report, New fraud threats in the digital-first world.
Understanding consumer attitudes around online security
Based on this comprehensive research, the report explores recent increases in fraud and online security risks, and provides insights into consumer preferences around identity verification and authentication methods.
The research presents an in-depth examination of individual preferences around identity authentication methods. People are becoming more familiar with the choices they now have to verify their identities online. Consequently, their expectations for safety and security are also rising.
The report includes valuable insights for online service providers that want to attract and build lasting relationships with new customers in the U.S., UK and China. As you would expect, there are some significant differences in attitudes and behaviors among consumers in each of these global markets. Still, the desires and expectations for online brands to protect customers at all times remain consistent:
- More than three-quarters (76%) of people feel that they’re at greater risk from online fraud than they were a year ago, and 75% are now worried about becoming victims of fraud
- When opening a new account, 71% of people cite security as the most important consideration
- Overall, 84% of people believe that brands will need to rely more on automated fraud protection to protect customers as fraudsters become increasingly sophisticated
By all accounts, the threat of online fraud is growing. While consumers do enjoy the options and convenience of digital services, they are wary of hidden risks they might face, and ensuring they’re protected on online has never been more important. As the report concludes:
Brands that can reassure consumers that they’re protecting them from online fraud and identity theft efficiently and conveniently can build increased trust, loyalty and engagement. And as our reliance on digital services continues to grow, this will become an even more essential ingredient for success as businesses move into an uncertain future.