Retailers should be aware of online fraud risk
At the point of sale in a brick-and-mortar retail location, staff members can review a number of data points to avoid online fraud. They can check a card's signature against the one placed on a receipt, verify that the name on the card matches the individual holding it or otherwise reduce the chance of an illegitimate sale. They can also note the quality of goods before a customer leaves the store.
With ecommerce, though, merchants can experience an increased risk of fraud. Unauthorized cardholders may purchase items, resulting in lost profit when the actual account holder reports the theft. In the United States alone, $54 billion is lost every year to this crime both on the Internet and off, and according to a recent study from Kount Volumatic, credit cards are responsible for 83 percent of all online fraud.
Potential preventative tools
There have been some advances made to reduce the chance of online fraud, though. Internet Retailer recently reported on the launch of Signifyd's fraud prevention software, which uses social media to help verify someone's identity. A 1,000 point scale gauges the risk involved in each transaction, and gives retailers the ability to deny suspicious looking sales.
The source explained the technology, noting that if an online purchase was made from a San Francisco IP address on a card with a French billing address, Signifyd will then analyze social media data. It would check for geolocation tagged Twitter or Facebook posts to verify that the card holder was in San Francisco, and if the risk scale were too low, the transaction could automatically be denied.
"We know that people leave a lot of footprints behind," Raj Ramanand, co-founder and CEO of Signifyd, told Internet Retailer. "We're using those footprints to try to stop the people looking to commit fraud."
Despite this technology, though, not all retail industry professionals are adequately safeguarding against fraud. Kount Volumatic noted that many merchants fail to implement prevention strategies for mobile sales, regardless of the fact that 34 percent of them offer m-commerce shopping options. As more stores move to include smartphone- and tablet-capable POS systems, and as more customers shop on their personal devices, additional security measures may be necessary to save millions of dollars and reduce the chance of shrinkage.
