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Social Distancing Has Caused More Online Shopping. And Fraud.
Large swaths of the global economy have ground to a halt as
governments scramble to stop the spread of COVID-19. In the U.S. alone, nearly 100
million people (and growing) have been directed to stay at home and
practice social distancing in an effort to limit the spread of the deadly
virus. As a result, non-essential businesses are closing, including bars,
restaurants, and some retailers.
With all these monumental disruptions to daily life, people
are increasingly turning to online shopping. Accompanying this uptick in online
activity is an increase in cyber fraud. To learn about the state of cyber fraud
and how social distancing is impacting it, PaymentsJournal sat down with David
Barnhardt, Chief Experience Officer at GIACT, and Raymond Pucci, director of Merchant
Services at Mercator Advisory Group.
During the discussion, Barnhardt and Pucci explained why
fraud is rising and how businesses everywhere should respond.
Even before COVID-19,
fraud was going up
One factor that makes the current situation troubling from a
fraud perspective is that fraud levels were already rising prior to the
pandemic. And even if fraud levels had plateaued, they were already high enough
to warrant attention from retailers.
According to recent data,
there are 14.1 million adults in the United States who have been victims of
identity fraud. Additionally, 3.6 million adults have been victims of account
takeover fraud—when a criminal seizes control of a real person’s account— and
this fraud vector cost the economy $4 billion in 2018.
Another worrisome fraud vector is new account fraud. There were
3.2 million victims of this type of fraud and in 2018, new account fraud cost
$3.4 billion, nearly half a billion more than the previous year.
All these data points reflect one thing: “The current state
of fraud is continuing to go up,” said Barnhardt. “And I believe we’re going to
see a far higher than normal amount of fraud attacks” in the near future.
Social distancing is
driving up fraud further: “This is the perfect storm”
Now that more commerce is being forced online, with physical
stores being shuttered and people told to stay at home, online fraud is going
to increase. “This is the perfect storm for fraud operators to hide in,” said
Barnhardt, pointing out that higher online transaction volumes make it easier
for fraudsters to operate.
He relayed that some of GIACT’s clients are reporting that
traffic volume on their websites is far larger than Cyber Monday or Black
Friday, a striking indication of how consumer habits are changing. This is not
too surprising considering that residents of the biggest cities in America,
including New York City, Chicago, and Los Angeles, are under shelter in place
orders.
The high rates of online shopping are resulting in more
fraud. For example, one of GIACT’s clients – one of the largest retailers in
the country – reported that they’ve already seen as much as a 15% uptick in the
rate of fraud over the past two weeks.
Pucci explained that companies are more vulnerable to fraud
because their business routines of risk managements and various policies and
procedures might be disrupted as employees scatter, with many being forced to
work from home. “I think business guard is down, and they’re not as vigilant as
they normally would be for fraud attempts,” he said.
And with more people shopping online, retailers want to make
that experience easier and more convenient for consumers. Since false declines
can depress revenue and drive consumers to a rival website, Pucci expects that
many companies will make their transaction authorization process more lenient.
But in accommodating genuine customers, companies will make themselves more
susceptible to fraud attacks.
Consumers beware,
scams are coming
Both Pucci and Barnhardt agreed that another problem is that
many people are frightened and thus more vulnerable to fraud attempts that prey
upon fear and confusion. Seeking to exploit such confusion, hackers will likely
increase their email phishing attempts and fake phone calls meant to trick
people into revealing sensitive information.
With these attempts likely to rise, Barnhardt offered some
words of caution to consumers. “Be careful of the emails that you’re sent. Be
careful on clicking on links; don’t click links,” he said.
Consumers should also be wary of which charities they’re
donating to and which websites they’re buying from. “If you’re going to donate
to charities, if you’re going to purchase from a website necessary goods or
services, do it through the trusted and verified websites,” he recommended.
Companies need to
employ strong identity and payment verification processes
While addressing fraud created by the COVID-19 crisis,
retailers across the country have two simple goals: “Protect yourself as a
company and protect the customers that are doing legitimate business with you,”
said Barnhardt.
In order to respond effectively, companies first need to
drill down into their analytics and figure out the extent of the problem. “If
I’m a retailer under these circumstances right now, I’m going to be reviewing
my fraud management policies and procedures,” said Pucci. “And I’m going to be
alerting all employees, having a company-wide awareness of the
vulnerabilities.”
He recommended that merchants reach out to their fraud
management partners to ensure they have the necessary tools and solutions in
place to handle their specific risk tolerances. Companies need to use a
solution which decreases false declines, allows legitimate users to transact
with ease, and enables companies to authenticate the identity of users when
necessary.
The EPIC Platform can
help
Luckily for merchants in need of a fraud-prevention
solution, there are effective options. One such solution is GIACT’s EPIC Platform,
with EPIC being an acronym for enrollment, payment, identity, and compliance.
The platform is designed to help companies of all sizes, so
it can “fit into a large corporation or even the smallest of small businesses,”
remarked Barnhardt. And since the platform is accessible via APIs, a full
integration can be accomplished in a couple days or weeks, depending the end
user’s capabilities, and without needing an on-premise installation.
For companies that are just starting to expand into the
digital space, or for those who are simply trying to bolster their online
security, GIACT’s EPIC Platform can help stop the surge in fraud that is
underway.
“The solution was designed to take away all the silos that
plague a lot of companies, and it allows for a holistic approach to managing
the customer, and really all of the customer’s requests,” explained Barnhardt.
To fortify the entire consumer lifecycle, the EPIC Platform analyzes large
amounts of data to verify and authenticate different data points throughout the
consumer lifecycle.
Conclusion
With social distancing becoming the norm for the foreseeable
future, companies need to be aware of the surge in fraud that comes with more
online shopping. Solutions such as GIACT’s EPIC Platform help businesses limit
fraud while improving the customer experience.
No matter what solution a company uses, “you have to really
look within your system and get everybody on board to be very vigilant, because
right now it’s a very vulnerable situation,” concluded Pucci.
The post Social Distancing Has Caused More Online Shopping. And Fraud. appeared first on PaymentsJournal.
View all episodes
By The PaymentsJournal PodcastLarge swaths of the global economy have ground to a halt as
governments scramble to stop the spread of COVID-19. In the U.S. alone, nearly 100
million people (and growing) have been directed to stay at home and
practice social distancing in an effort to limit the spread of the deadly
virus. As a result, non-essential businesses are closing, including bars,
restaurants, and some retailers.
With all these monumental disruptions to daily life, people
are increasingly turning to online shopping. Accompanying this uptick in online
activity is an increase in cyber fraud. To learn about the state of cyber fraud
and how social distancing is impacting it, PaymentsJournal sat down with David
Barnhardt, Chief Experience Officer at GIACT, and Raymond Pucci, director of Merchant
Services at Mercator Advisory Group.
During the discussion, Barnhardt and Pucci explained why
fraud is rising and how businesses everywhere should respond.
Even before COVID-19,
fraud was going up
One factor that makes the current situation troubling from a
fraud perspective is that fraud levels were already rising prior to the
pandemic. And even if fraud levels had plateaued, they were already high enough
to warrant attention from retailers.
According to recent data,
there are 14.1 million adults in the United States who have been victims of
identity fraud. Additionally, 3.6 million adults have been victims of account
takeover fraud—when a criminal seizes control of a real person’s account— and
this fraud vector cost the economy $4 billion in 2018.
Another worrisome fraud vector is new account fraud. There were
3.2 million victims of this type of fraud and in 2018, new account fraud cost
$3.4 billion, nearly half a billion more than the previous year.
All these data points reflect one thing: “The current state
of fraud is continuing to go up,” said Barnhardt. “And I believe we’re going to
see a far higher than normal amount of fraud attacks” in the near future.
Social distancing is
driving up fraud further: “This is the perfect storm”
Now that more commerce is being forced online, with physical
stores being shuttered and people told to stay at home, online fraud is going
to increase. “This is the perfect storm for fraud operators to hide in,” said
Barnhardt, pointing out that higher online transaction volumes make it easier
for fraudsters to operate.
He relayed that some of GIACT’s clients are reporting that
traffic volume on their websites is far larger than Cyber Monday or Black
Friday, a striking indication of how consumer habits are changing. This is not
too surprising considering that residents of the biggest cities in America,
including New York City, Chicago, and Los Angeles, are under shelter in place
orders.
The high rates of online shopping are resulting in more
fraud. For example, one of GIACT’s clients – one of the largest retailers in
the country – reported that they’ve already seen as much as a 15% uptick in the
rate of fraud over the past two weeks.
Pucci explained that companies are more vulnerable to fraud
because their business routines of risk managements and various policies and
procedures might be disrupted as employees scatter, with many being forced to
work from home. “I think business guard is down, and they’re not as vigilant as
they normally would be for fraud attempts,” he said.
And with more people shopping online, retailers want to make
that experience easier and more convenient for consumers. Since false declines
can depress revenue and drive consumers to a rival website, Pucci expects that
many companies will make their transaction authorization process more lenient.
But in accommodating genuine customers, companies will make themselves more
susceptible to fraud attacks.
Consumers beware,
scams are coming
Both Pucci and Barnhardt agreed that another problem is that
many people are frightened and thus more vulnerable to fraud attempts that prey
upon fear and confusion. Seeking to exploit such confusion, hackers will likely
increase their email phishing attempts and fake phone calls meant to trick
people into revealing sensitive information.
With these attempts likely to rise, Barnhardt offered some
words of caution to consumers. “Be careful of the emails that you’re sent. Be
careful on clicking on links; don’t click links,” he said.
Consumers should also be wary of which charities they’re
donating to and which websites they’re buying from. “If you’re going to donate
to charities, if you’re going to purchase from a website necessary goods or
services, do it through the trusted and verified websites,” he recommended.
Companies need to
employ strong identity and payment verification processes
While addressing fraud created by the COVID-19 crisis,
retailers across the country have two simple goals: “Protect yourself as a
company and protect the customers that are doing legitimate business with you,”
said Barnhardt.
In order to respond effectively, companies first need to
drill down into their analytics and figure out the extent of the problem. “If
I’m a retailer under these circumstances right now, I’m going to be reviewing
my fraud management policies and procedures,” said Pucci. “And I’m going to be
alerting all employees, having a company-wide awareness of the
vulnerabilities.”
He recommended that merchants reach out to their fraud
management partners to ensure they have the necessary tools and solutions in
place to handle their specific risk tolerances. Companies need to use a
solution which decreases false declines, allows legitimate users to transact
with ease, and enables companies to authenticate the identity of users when
necessary.
The EPIC Platform can
help
Luckily for merchants in need of a fraud-prevention
solution, there are effective options. One such solution is GIACT’s EPIC Platform,
with EPIC being an acronym for enrollment, payment, identity, and compliance.
The platform is designed to help companies of all sizes, so
it can “fit into a large corporation or even the smallest of small businesses,”
remarked Barnhardt. And since the platform is accessible via APIs, a full
integration can be accomplished in a couple days or weeks, depending the end
user’s capabilities, and without needing an on-premise installation.
For companies that are just starting to expand into the
digital space, or for those who are simply trying to bolster their online
security, GIACT’s EPIC Platform can help stop the surge in fraud that is
underway.
“The solution was designed to take away all the silos that
plague a lot of companies, and it allows for a holistic approach to managing
the customer, and really all of the customer’s requests,” explained Barnhardt.
To fortify the entire consumer lifecycle, the EPIC Platform analyzes large
amounts of data to verify and authenticate different data points throughout the
consumer lifecycle.
Conclusion
With social distancing becoming the norm for the foreseeable
future, companies need to be aware of the surge in fraud that comes with more
online shopping. Solutions such as GIACT’s EPIC Platform help businesses limit
fraud while improving the customer experience.
No matter what solution a company uses, “you have to really
look within your system and get everybody on board to be very vigilant, because
right now it’s a very vulnerable situation,” concluded Pucci.
The post Social Distancing Has Caused More Online Shopping. And Fraud. appeared first on PaymentsJournal.