9 Evolving Fraud Casesโ ๏ธ๐๐ฝ
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Ecommerce Fraud is on the rise and unfortunately is a problem that businesses have been facing from the onset of trading and its threat only increases with each passing year.
In the brick and mortar environment (aka #cardpresent), the good news is that using cards has become much safer thanks to the rollout of #EMV chip card.
Online, however, it is a different story๐. The volume of payment fraud has risen dramatically over the last decade, in tandem with the acceleration of ecommerce. The anonymity offered by the internet lowers the fraudsterโs risk of being caught. Ironically, some experts think that the rise of EMV is directly related to the rise in card-not-present fraud transactions๐ค.
European ecommerce merchants lost a reported 3.2% revenue to fraud in 2021 as ecommerce became a fertile new battleground for scammers. Digital tools such as mobile apps, wallets, cryptocurrency and financial technology are reportedly all contributing to the evolving fraud landscape๐ต๏ธ. The use of technology to perpetrate fraud dates back to the 1980s when the internet started to gain relevance. One of the first scams exploited loopholes in telecommunications policies by trying to con people into making calls to expensive phone numbers. Then fraudsters began to target people using TV ads.
By the early 90s, fraud took on new dimensions when eCommerce platforms became a thing. Fraudsters took advantage of the weaknesses of online credit card use. At the time, credit card verification technology was still in its infancy, so credit credit card information stealing was only the beginning of a tactic that would continue to wreak havoc for years.
Today, fraud continue to cause merchants losses. Global online fraud losses grew from 17.5 billion in 2020 to 20+ billion in 2021. According to Juniper Research, online sellers will have lost $130 billion to online fraud between 2018 and 2023. Criminals are becoming even more sophisticated, and their fraud tactics are also evolving.
Some of the most common types of ecommerce fraud that saw an increase are:
โก๏ธ Friendly Fraud
โก๏ธ Account takeover (ATO)
โก๏ธ Identity theft
โก๏ธ Refund Abuse
โก๏ธ Card Testing
Before the digital we live in now, transactions were monitored manually, which was time-consuming. Cheques had to be screened using crude methods that were sometimes inefficient. These crude methods werenโt enough to prevent fraudsters from having their way despite the amount of time and money invested in checking ledgers.
By the late 1990s, basic data matching systems became available. Companies could identify suspicious transactions faster and efficiently. Companies began collaborating using data techniques to create cross-sector data-matching solutions, which helped reduce the risk of fraudulent attacks.
Today, fraud prevention requires extensive measures to match data points to detect anomalies. As scammers continue to get more innovative, it is clear that ecommerce fraud is notโ something that merchants can afford to ignoreโ
Some of the fraud prevention players include: Fraudio, Nethone, Kount, Ethoca, Verifi, Chargebacks911, Fraud.com etc. Recap in infographic below๐๐ฝ
Always welcoming your insights, we are on this journey to co-build and learn together๐๐ซ
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