Fraud Is a Quick-Growing Concern for Businesses
Six out of every 10 businesses are experiencing the same or more fraudulent losses online compared with a year ago.
Experian's Global Fraud and Identity Report shows that fraud trends and patterns continue to grow around the globe. The research found that most businesses – 72% – cite fraud as a growing concern.
The research also shows that businesses need to better identify their customers to help combat online fraud. Currently, most businesses tend to demonstrate suspicion when it comes to preventing fraud, following a route of detection rather than one of permission or trust: 71% know that they deny more transactions than they should. This doesn't just lead to a loss of sales; it's also likely to damage the lifetime value of that customer.
Business leaders agree that if they were more precise in identifying customers and avoiding denial of real transactions, they would see an increase in revenue. In fact, 84% of businesses say the need for fraud risk mitigation could be reduced if they were certain about customers' identity.
As businesses undergo digital transformation, they also recognize the importance of trust and the need for technology to deliver it.
"Whether it's in our favorite coffee shop or shopping online, being recognized by the people we do business with goes a long way," said Kathleen Peters, Experian senior vice president of global fraud and identity. "Recognition helps to stimulate trust, and trust is what makes all of us feel safe and protected. Trust is the currency of digital commerce. Technology is the enabler that underpins it."
Findings from the study, which is based on interviews of more than 5,500 consumers and 500 business executives in 11 markets around the world, show that while consumers want to be recognized, they also expect online banks and retailers to do everything they can to protect their information and secure their transactions. Nearly 7 out of every 10 consumers like security protocols when they transact online, because it makes them feel protected. But that doesn't mean they like too many hurdles and inconveniences. The most effective fraud prevention and identity strategies keep people safe without disrupting their experience.
"Fraud is always evolving, and fraudsters are becoming more resourceful. Good fraud detection requires multiple strategies, including better customer recognition," added Peters. "Simply put, the better you recognize your customer, the better you can recognize fraud."
On the customer recognition front, Lisa Baergen, marketing director at NuData Security, told us via email that in this age of data breaches, password reuse and password-guessing technology, a simple username and password method of authentication is simply not enough. But there are technologies that can help.
“The ability for organizations to limit fraudulent activity is at present marred by their inability to accurately identify customers,” she said. “The use of two-factor authentication, or, even better, passive biometrics, which is capable of identifying users based on passive biological factors impossible to mimic, could help to bridge the identification gap for companies and put 84% of fraudsters out of business. Behavioral and passive biometrics, in a layered approach, help to identify the identity of the real consumer without applying additional friction or inconveniencing the transaction. Simply analyzing how a consumer holds or enters keystrokes on their device or hundreds of other behavioral data points can verify that there is a human behind the transaction and that it is the right human. At the end of the day, trusting the online environment is what matters.”
Source: Information Security Magazine