How to Combat eCommerce Fraud

Online merchants live in a fast-paced world trying to provide their clients with a positive and frictionless purchasing experience. Managing this need to satisfy customer expectations is continually challenged by significant, persistent and ever-changing cybercrime.

Several troubling trends in eCommerce fraud emerged recently. Here are three of the top threats and tips for defending against them.

1.   Mobile Is the Latest Target

It was predicted that by the end of 2017, $2.29 trillion worth of purchases were completed on a mobile device. That is nearly one third of global eCommerce purchases. So, it is not surprising that breaching mobile device security has become more popular with fraudsters.

Studies show that 90% of consumers who own a mobile device consider online shopping to be a top activity and a new reason why merchants needs to be vigilant against fraud when it comes to eCommerce. A recent survey by CyberSource found that eCommerce retailers expect mobile channel fraud losses to fall just below their web store fraud losses.

Tips to combat this fraud:

• Alter your fraud practices for each transaction channel. Consumers tend to shop differently when they are on a mobile device as opposed to when they are using a laptop. So, tracking customer behavior across channels and devices can provide signals that indicate unusual activity.
• Use data that’s unique to mobile transactions. For example, every mobile device has a unique device ID that can be associated with a person or previous transactions. The relation between a person and a mobile phone number is important for verifying identity because consumers tend to hold on to their mobile numbers over time.

2.   Fraud Increase in Lower-Priced Items

Fraudsters have proven to be adaptable by changing their tactics frequently in response to new fraud prevention strategies. For example, as merchants have moved to protect themselves against fraud involving high dollar items, fraudsters shifted their focus on more modestly-priced items.

In 2017, there was a large uptick in account takeover fraud that targeted items with smaller ticket prices – such as laptops or fashion trends – because fraudsters want items that are in demand, easy to resell and fall below the radar of automatic review.

Tips to combat this fraud:

• Manage fraud in dynamic fashion. There isn’t one single fraud detection technology or solution that will ever be enough to stop fraudsters. Gartner analysts stress the importance of dynamic data and linkages over static data. By adopting multiple layers of security, organizations will see the greatest return in preventing fraud.
• Pay close attention to transaction histories and speed. People follow patterns in what they purchase, where they shop and how often. So, if someone suddenly purchases something out of the ordinary, it may be a sign of fraud. Fraudsters also try to order as much as possible from a stolen account before the account is shut down. So, if a customer’s orders unexpectedly increase in frequency or volume, that can also be a sign of fraud.

3.    Shopping Zombies

Fraudsters are gaining physical control of their targets’ computers through phishing and malware attacks. Once fraudsters have gained access to a computer, they can monitor the user’s browsing behavior and use malware to capture a consumer’s login information.

This type of attack concerns merchants because the customer’s IP address, device ID, location and other device-specific information appear to be valid – but fraudsters have effectively turned the consumer’s computer into a shopping zombie.

Tips to combat this fraud:

• Leverage a wide range of data in your fraud model – especially biometrics. Relying on static data like device ID and IP address could leave you susceptible to shopping zombies. When a fraudster has control of a user’s device, it is sometimes possible to determine who is controlling the device using biometrics.
• Look for differences in previous order patterns and histories. Remember, order history can be a powerful tool to identify unusual purchasing patterns and potential fraud.

Fraud in general is always changing – especially in the eCommerce world. By following the tips mentioned above, you can help in the fight against eCommerce fraud and protecting your loyal customers and your business.

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