Ecommerce fraud has seen a significant increase in recent years, with businesses losing an estimated $100 billion in 2020 alone. As the ecommerce landscape continues to evolve, experts from TeleSign, including Michael Lappin and Bart Goethals, have shed light on the state of fraud in the industry and provided strategies to combat this growing problem.
One alarming revelation is that even on major platforms, it is still possible to create fake accounts, highlighting the lack of safeguards in place to verify user identities. Social engineering, which includes phishing and in-person attempts to gain unauthorized access, has become a prominent method employed by fraudsters. Additionally, account takeovers, promo abuse, chargeback fraud, artificially inflated traffic, and mass pumping are all contributing to the rise in ecommerce fraud.
Artificial intelligence has made these fraudulent schemes more sophisticated, with tools like fraudGPT enabling fraudsters to create phishing campaigns based on their prompts. Private fraud summits on communication channels have also facilitated the sharing of ideas among thousands of individuals.
Balancing security measures with a seamless user experience is a challenge for businesses. Implementing multiple combinations of security controls from different solution providers can help establish a quick and effective solution. Machine learning solutions can assess the real-time risk of new customers based on digital identifiers such as phone numbers, IP addresses, and email addresses. However, multi-factor authentication remains critical in deterring fraudsters, as they are opportunistic and more likely to give up if faced with additional security measures.
Tracking changes in account logins, including behavior, device, and IP, is crucial for identifying potential fraudulent activity. Automated systems that can assess and respond to these changes in real-time are essential. For instance, sudden spikes in transaction amounts should trigger a review process to prevent chargeback fraud.
Businesses worldwide are recognizing the importance of investing in digital identity solutions, verification solutions, authentication solutions, behavioral solutions, and biometrics. These measures should not be seen as a cost but as an investment in creating a secure ecosystem that ultimately leads to higher revenue and profits.
To gain further insights into the fraud landscape and discover effective strategies to protect businesses of all sizes, watch the VB Spotlight event hosted by TeleSign. The on-demand event provides valuable information on fraud prevention in ecommerce.