Ecommerce fraud has been on the rise, and it’s essential for businesses to take action to prevent it. With the boom in digitalization during the pandemic, the ecommerce landscape has been evolving rapidly. In fact, it’s projected that ecommerce in the U.S. will surpass $1.3 trillion by the end of this year. However, along with this growth comes an increase in fraud, with businesses losing an estimated $100 billion last year alone. Account takeovers have doubled in recent years, and fraudsters are now leveraging artificial intelligence to enhance social engineering attacks.
According to experts from TeleSign, a leading provider of fraud prevention solutions, creating fake accounts is still possible on one out of every three platforms, regardless of their size or value. This alarming statistic highlights the need for businesses to implement stronger safeguards to verify user identities. Additionally, data breaches are occurring every minute, putting valuable personal information at risk of being sold on the dark web.
There are six types of fraud that businesses need to be aware of. Social engineering, which includes phishing and in-person attempts to gain access, is a significant concern. Fake account fraud is also increasing due to the lack of verification measures in place. Account takeovers and promo abuse pose ongoing risks as well. Fraudsters can exploit weak spots or loopholes in promotions or coupons, leading to financial losses for businesses. Chargeback fraud and artificially inflated traffic are persistent issues too. Artificial intelligence has made these schemes even more sophisticated, with tools like fraudGPT generating phishing campaigns based on fraudsters’ prompts.
Balancing security measures with a seamless customer experience is a challenge faced by businesses. While critical security controls are necessary, they can add friction to the user journey. TeleSign suggests finding a balance between high-friction and low-friction security measures. By combining different solutions and spread them across multiple providers, businesses can create an effective and real-time defense against fraudsters. Machine learning can also play a role in assessing the risk of new customers based on digital identifiers such as phone numbers, IP addresses, and emails. However, multi-factor authentication remains crucial in deterring fraudsters, as they are opportunistic and will give up if the process becomes too challenging.
Investing in technology and adopting the right perspective is key to combating ecommerce fraud. Tracking changes in account logins, such as unusual behavior or transactions, is essential. Businesses need to have an automated system that can quickly assess and react to these changes. Viewing solutions like digital identity, verification, authentication, behavioral analysis, and biometrics as a nuisance cost is a mistake. Instead, businesses should see them as investments that will ultimately lead to a clean and profitable ecosystem.
To learn more about the fraud landscape and effective solutions to protect your business, TeleSign offers a VB Spotlight event that provides valuable insights. It’s crucial for businesses of all sizes to stay informed and take action against ecommerce fraud.