Card-not-present Fraud Increases as Consumers Move Online and Mobile

One of the biggest fraud warnings in the US and around the world for 2017 was credit card fraud, particularly card-not-present fraud. In Europe, card-not-present fraud increased from 50% gross loss in 2008 to 70% last year, with most fraud impacting the UK and France. Fraud experts warn this is just the beginning. The research firm Juniper predicted a 71 Billion USD loss globally due to card-not-present fraud over the next 5 years. As history dictates, when technology advances, so do criminals.

Shoppers and businesses were warned that there might be a massive fraud spike during Black Friday weekend. But in an impressive turn against the tide, it looks like US retailers were well prepared to combat fraud this season. Unlike what was initially predicted, credit card fraud dropped for the first time over Black Friday weekend by 29%. After the industry was rocked by huge data breaches from Target and other retailers, it looks like the investments made to boost security paid off.

Technology Is the Problem and the Solution for Retail

This good news for the retail industry might be a temporary reprieve. The transition to EMV chips in credit cards plays a big role in reducing point-of-sale fraud and might account for the drop in fraud during the holiday shopping season. The reality is that fraudsters will continue to follow the consumers.

In the US, m-commerce has been increasing year-over-year. For this holiday shopping season, purchases made on mobile devices were a 36.9% of all sales, and e-commerce was up 17% from last year. As more consumers move to online and mobile shopping, expect to see more card-not-present fraud as well. Public wi-fi can encourage more consumers to use their mobile devices to shop, but all those transactions also create opportunities for hackers to get sensitive information through key-logging, phishing, and other scams. Consumers might feel protected by all the technology they are using and have no idea how just how much risk is actually connected to these conveniences. For example, shoppers in India often have 3 or more shopping apps on their smartphones and almost half of all consumers have been victims of retail fraud.

Retail shopping isn’t the only industry that should be bracing for more card-not-present fraud. The recent data breaches at financial institutions and on sharing economy platforms show that pretty much any kind of online or mobile transaction poses a high risk to consumers and businesses.

Invest in Security Now or Pay a High Cost Later

One effective security measure to protect against card-not-present fraud is to add multi-factor or biometric authentication to tie the transaction to an actual person. Linking transactions to identities can reduce the risk of fraud both at check-out as well as help to lower the amount of customer data that businesses manage and store. This means businesses can protect against fraud while also minimizing the risk of being a target for data breaches.

Investing in customer data protection and keeping transactions secure is essential in creating customer trust and loyalty.  With its high competition and slim margins, the retail industry has learned that it cannot afford to be reactive and was effective in curbing point-of-sale fraud during the peak shopping season. We learned this year that other industries wrongly thought themselves to be immune to hackers. The consequences of major data breaches can last for years and be a crippling cost to many businesses.

As you prepare for 2018, make sure your business is incorporating the best practices for securing customer data and preventing card-not-present fraud. It is more cost-effective to invest in security measures now than to pay a much steeper price later.

 

Acuant Solutions for Customer ID Verification

Fraudsters Want Your ID Information. What Are You Doing to Stop Them?

In 2016, identity theft amounted to $16 billion and affected more than 15.4 million people in the United States. Your identity is arguably your most valuable asset, but how often are you aware of all the ways that you use it to transact? With the lines of physical and digital identity becoming increasingly blurred, it’s more important than ever to safeguard your identity during transactions.

Are you doing enough to ensure you’re keeping your personal information – and your customers’ information – safe from fraudsters?

Click to download the free infographic: Where Does Your Identity Take You in a Day?

Every day, Americans make transactions by swiping, scanning or chip-reading – from grabbing a cup of coffee to purchasing airline tickets. The convenience of these transactions, it seems, trumps concerns of information falling into the wrong hands. But the time has passed for simply hoping our ID information – and our customers’ ID information – will continue to be safe, simply because you’ve seen no evidence it’s been compromised.

Just a Day in the Life for Identity Thieves

Let’s look at a typical day anyone could have to see how easily one can expose their ID information to considerable security risks.

Mobile banking. Shortly after leaving the office, a person decides to check the balance of their checking account. They use the local coffee shop’s free Wi-Fi, because like 67% of Millennials, they use a mobile app to access their banking information. Though on an open network, they tap in their ID, password and perhaps other Know Your Customer (KYC) information, as required by anti-money laundering (AML) regulations. Did a fraudster track their every keystroke?

Click to download the free infographic: Where Does Your Identity Take You in a Day?

Small business transactions. Because this person is now running late to a doctor appointment, they pull out their credit card to engage one of the 1,000 bike-sharing services across the country, a market that is expected to become a $6.1 billion business by 2020. Are the security measures employed by all 1,000 vendors up to par? How does this one rank?

Medical Insurance. At the doctor’s office, they check in at the front desk, making their co-pay with the same credit card and giving their medical insurance card information which is likely photocopied. Like most people, this person is more than likely unaware that 15.4 million medical records were stolen in 2016 alone, and that 301 people across the country were charged roughly $900 billion in false billing.

Remember, Identity Thieves Never Take a Vacation

Although you’re in a rest-and-relaxation mode, you still know not to leave your hotel room unlocked or your wallet on a car seat. If only you could take similar measures to protect your ID information. Here are some common transactions that require ID information on a typical vacation – and some data associated with their risk of security breaches.

Accommodations. The global vacation rental market is poised to be worth $193.89 billion by 2021. Fully 46% of customers check in using hotel loyalty programs, and loyal customers spend on average 67% more than new ones. Front desks and agencies are mostly taking your identity document photocopying it and storing it somewhere; a very insecure data capture method. All this makes vacation rental businesses likely targets for theft of identity information.

Ground transport. Uber reported that 40 million people used the ride-hailing service in 2016. Incidentally, 8,000 ride-hailing service drivers in Massachusetts failed to pass new state background checks in 2017. Similarly, car-rental agencies routinely require a check of ID documents to complete transactions and mostly use the archaic photocopy method of capturing your ID leaving you vulnerable to a paper file floating around.

The More You Know, the Better

Our free infographic, Where Does Your Identity Take You in a Day , illustrates just how important it is to protect your ID information.

Acuant provides businesses with identity proofing solutions for trusted transactions, for more information contact us here.

 

Read the Infographic