Three Ways to Combat Rising Retail Fraud
December 20, 2018
Reports show that fraud challenges and cost pressures continue to plague retailers across the U.S. A study from ACI Worldwide projects a 14 percent increase in total retail fraud attempts and a 17 percent increase in value this year compared to 2017. Areas of particular concern are the sharp rise in card-not-present (CNP) and mobile commerce fraud, according to the annual LexisNexis “True Cost of Fraud” report. The number of merchants selling goods via mobile channels, especially digital goods, is growing, but there are significant risks. For each dollar lost to fraud, online merchants can ultimately expect to lose $2.94 in revenue. That number jumps to $3.29 per dollar for m-commerce retailers.
The dramatic growth of mobile sales and the need to acquire and retain customers are driving retailers to move to m-commerce. Millennials are particularly likely to purchase from their mobile devices, but m-commerce transactions are rising across the board as smartphone ownership is at all time high. Half of U.S. adults (51 percent) report making online purchases via their smartphone according to Pew Research.
So what can retailers do to mitigate the risks of online shopping? Here are three ideas to keep identity scammers at bay.
1. Require Customer Accounts
To better know and understand their customers, retailers can require shoppers to set up an account. Taking this step will ensure that customers provide more information about themselves during the buying process. In order to make on-boarding seamless, merchants can allow mobile shoppers to use their smartphone camera to capture the identity document and auto-populate key customer information directly into the system using Acuant’s IDscan technology.
2. Verify Your Customer
As mobile commerce is the sector most susceptible to fraud, particularly identity fraud, retailers are realizing the importance of both ID authentication and verification. With AssureID, merchants can know that the identification document is valid and use Acuant’s FRM technology, to authenticate that the customer is the person in the document. In the digital ID capture process, Acuant runs up to 50 different authentication tests per document in seconds. Acuant then validates the identity of the user, comparing facial biometrics from a liveness-tested selfie to the identity document. The combination of Acuant’s solutions enables a streamlined workflow for shoppers while reducing the risk of fraud from identity theft.
3. Choose Cloud-Based Solutions that Utilize Machine Learning
Online fraud detection is growing in complexity and demand, and its tools are being used for risk-based authentication and new account fraud prevention. Security and risk management leaders involved in online fraud detection should use machine-learning analytics and cloud-based deployment options, states Gartner’s 2018 Market Guide for Online Fraud Detection.
Mobile commerce is where retailers are seeing strong growth and given the current retail environment, no merchant can afford to ignore this trend. At the same time, it is important to balance the risk and the opportunity to ensure that retailers are protecting themselves against loss while still providing seamless customer experience. Acuant provides solutions that are best in class, securing transactions, protecting PII data and providing a pleasing customer experience.
Learn more about Acuant’s identity verification solutions and visit us at NRF 2019: Retail’s Big Show, Jan. 13-15 in New York. We’ll be in our partner Aila Technologies booth # 1240 demonstrating our solutions and happy to book meetings on-site here.