Today’s consumers have been shifting away from the brick and mortar shops of Main Street and the mall to exchanging goods and services online. Free from the barriers of time and distance – with an exponential shift towards mobile – consumers are loving the convenience and options available to them through a few clicks, swipes or form fills.
Around the world, eCommerce represents trillions of dollars of business with growth predicted to approach US$5 trillion worldwide by 2021. Unfortunately, fraudsters are seizing on the opportunity to skim and scam their way through the online market.
Card not present (CNP) fraud – when a transaction happens online and no physical payment card is presented to a merchant – resulted in a dramatic increase in loss to business, projected at $10 billion in 2014 rising to nearly $19 billion for 2018 in the U.S. That means billions of dollars going into the hands of criminals. Defending against and fighting eCommerce fraud is a serious matter for businesses. Turning to smarter data solutions can offer new opportunities to mitigate the risk of fraud.
Data is used to inform decisions and power processes. Every eCommerce relationship or transaction involves data, such as a name, a shipping address, a credit card number or other information. Data fuels the transaction by helping to define, prove and verify identities, ensuring that the right person receives the goods and services. But data can be smarter, or at least, used in smarter ways to verify identities and detect eCommerce fraud before it reaches the completion point.
Each individual identity includes a mosaic of data sets and points that creates a unique profile for every person. Using data points in a smarter fashion can create barriers that prevent criminals from gaining access to eCommerce accounts while authorizing legitimate customers with an effortless way to access their account. In mere seconds, smarter data can be referenced, verified and used to prevent a fraudulent activity – saving your company time, money, and resources – while a legitimate activity passes easily, allowing you to complete the sale.
Detecting and Deflecting Fraud
A lot of the fraud risk in eCommerce transactions comes from credit and payment cards, especially given the fact that they are card-not-present transactions. Typically, CNP fraud involves using card information and details that have been stolen from an actual cardholder and that stolen data being used to create counterfeit online accounts to make purchases or bogus transactions.
But smarter data can help weed out these problems, especially when verifying identities at account creation. There are a number of ways that smarter data can help verify new customers with limited friction or effort on the customer’s part while inserting roadblocks for fraudsters.
Email is one of the most crucial pieces of information required at account creation. Not only can it be used for communicating with customers, but it can also help verify them. That can be done on a match/no match basis or by sending a notification link to verify the address and the account. Using a two-factor authentication process adds an extra level of protection at account creation. Commonly known as 2FA or two-step, the process sends a code to the email address associated with the account. Once entered, both the email address and the account are secured. But if no code is entered, or a legitimate customer receives a code that was not requested, that’s a red flag for potential fraud.
Customers are increasingly using their mobile devices for eCommerce and financial transactions, which has led to mobile verification for fraud prevention. Some examples of identity verification and authentication through mobile devices include two-factor authentication or through a process that matches mobile identity attributes utilizing mobile network operator (MNO) information to confirm an identity. Mobile data can be used to verify the user’s identity by cross-referencing MNO data for identity matching, proximity location, device information and call forwarding statuses.
Document scan and verification
In the physical world, an identity card such as a driver’s license, passport or other government-issued document is the standard for verifying an identity. In the digital world, the same document can also be used to authenticate a customer online without ever having to manually verify the physical identity document. By taking a photo of the identity document and including a “selfie,” a customer can upload these image files on their mobile device when opening an account. The identity document verification technology scans and compares the data, including biometric points in the facial photo, to validate the document and verify the customer’s identity to help reduce fraud.
Reinforce Your Defenses
Smarter data can also help power identity verification faster and easier. Today’s electronic identity verification solutions use a wealth of data to connect the dots from reliable sources across the world, in real-time. In turn, this helps create the desired result of an effortless customer experience that mitigates risk or fraud while adhering to compliance requirements, such as Anti-Money Laundering (AML) and Know Your Customer (KYC) rules.
As eCommerce continues to grow, the risk and cost of fraud will too. Fraudsters will always go for the easiest, fastest, most lucrative payoffs and that means targeting eCommerce sites that do not employ vigilant and vigorous practices for verifying customers and identifying risks and potential fraud. Using smarter data, though, will reinforce your fraud defenses, going a long way toward curbing eCommerce fraud.