As e-commerce continues to grow, so does the business potential for fraudsters. And many common security measures aren't enough to solve the problem.
After one of the most difficult years on record when it comes to fraud, and with an industry that is constantly evolving, here are five online fraud dangers that online business should look out for in 2015.
EMV on the Horizon. While solving many crucial card present weaknesses, the EMV migration will actually make things worse for online retailers.
With lower barriers to entry, card not present transactions will become a hot target for fraudsters who will seek for the weakest link after being challenged at the point of sale. Dont be fooled into thinking that EMV solves all your problems. EMV migration is closing the door on the fraudster, be fully prepared to wait for him by the window.
Old dog, new tricks. Our space is changing by the minute, and tools that have previously been common practice have become outdated and ineffective. One great example is IP Geolocation. In our hyper-mobile reality, this popular authentication tactic is no longer relevant when you look at the growing volumes of mobile commerce, usage of Wi-Fi networks and the growing number of Dynamic IP Allocation solutions. Keep up with the new practices, avoid blacklisting legitimate buyers and letting in fraudsters.
Don't Fall in Love with buzzwords. Big data, machine learning, authentication, fingerprinting, velocity all of those buzz words sound great but before carrying out a plan its important to truly understand their consequences, and unlike what people think its rarely a technological problem. Predicting human behavior isnt like predicting the weather, people change and adapt and the models have to pick up on those nuances and constantly adapt accordingly thats not a Big Data issue, its a behavioral issue. Machine Learning will become a necessity for efficient detection, but in order for the algorithm to recognize good from bad, merchants need to absorb dozens of thousands of fraudulent transactions. Are you ready to take that hit on your own? Make sure you do a thorough research before choosing whats right for your business.
The manual review addiction. Manual reviews are slowing businesses down in every possible way. Todays fraudster is agile, savvy and sophisticated. Using manual reviews is by no means an efficient way to catch him.
Manual reviews prevent businesses from utilizing quick fulfillment, compromise their ability to scale and require immense resources and focus that could have been directed at growth opportunities or customer care. Yet, 73% of retailers use manual reviews as a fraud prevention practice, and 20% spend over 20 minutes to review a single transaction! Why? Because it gives them a sense of control, because some people dont like changes, and why fix it if it aint broken? Either way, find out your true ROI on manual reviews, there might be a better solution for you.
The fear of fraud can post a bigger threat than the fraud itself. Keep your eyes on the prize: fraud prevention is a means to an end protecting revenue and improving the bottom line. Strict or inaccurate fraud practices will generate high false positives and a cumbersome user experience that will chase away your users and reduce conversion rates. Fear of fraud will make you miss out on new opportunities in global markets that can make your 2015 especially phenomenal.
Noam Inbar is vice president of business development at Forter.