Ecommerce Fraud Trends in 2021
1. Voice commerce
More and more retailers are turning to voice commerce to better serve their customers who now expect the convenience and speed of asking ‘Alexa’ or ‘Siri’ to complete purchases for them using their voice. However, with this new technology comes the risk of fraud. It’s in its infancy, meaning voice-enabled shopping is ripe for fraud and other security vulnerabilities. One particular example is when Amazon sent recordings made by its Alexa voice-activated assistant to the wrong user, therefore retailers should err on the side of caution when using voice commerce.
2. Omnichannel shopping
Consumers are increasingly engaging with retailers through multiple channels including social media, by phone and in store, using multiple payment methods and devices. This presents a number of challenges to retailers, including: increased exposure to risk and greater complexity around fraud management. The types of omni-channel fraud include;
Businesses looking to use an omnichannel approach should look into ways they can protect customer data, accounts, and sensitive financial data, on top of protecting their physical and digital assets.
3. Dynamic pricing
Dynamic pricing is a strategy in which product prices continuously adjust, sometimes in a matter of minutes, in response to real-time supply and demand. While this might be effective for retailers, the flip side is there are tech-savvy consumers out there and it’s quite easy for them to log in from different IP addresses. These consumers may be able to take advantage of companies whose prices vary depending on the location of the buyer.
4. Mobile commerce
According to figures, mobile fraud attempts more than doubled from 2018 to 2019. Fraudsters see m-commerce as a lucrative opportunity, because many retailers haven't adapted their fraud prevention practices for the smaller screen and they aren’t keeping up with the ways that cybercriminals work. Types of mobile commerce fraud could include:
True Fraud: This occurs when stolen credit and/or debit card details are used successfully to complete a transaction.
Account Takeover Fraud: This occurs when a fraudster gains access to a customers online account and masquerades as a customer.
Chargeback Fraud: This occurs when a customer completes a transaction but then intentionally utilizes the dispute process in order to get their money back whilst retaining the goods.
5. Open banking
The new-found freedom afforded by open banking has come at a cost. With added convenience comes complacency. Only now are companies beginning to step up and secure their online spaces as consumers have been made aware of threats such as phishing, which not only threaten their bank account, but financial providers.
6. Buy now pay later
More and more consumers are starting to shift their preferences away from credit cards, particularly among GenZ and opting to pay for goods using Buy Now, Pay Later (BNPL) solutions offered by companies like Afterpay, Klarna, and SplitIt. But with them does come a risk of fraud. For example, fraudsters are using stolen debit and credit card details to create accounts and complete unauthorised purchases. The simplicity and increasing adoption of these payments can leave merchants exposed and vulnerable to fraud losses, therefore, it’s crucial for merchants to follow best practices and keep themselves one step ahead of criminals.
Although wearables, such as smartwatches, streamline the checkout process and also create new customer experiences, the risk of fraud is high. They hold a tremendous amount of sensitive personal and financial information on them which is then passed from device-to-device, device-to-cloud and wrist-to-wrist, putting consumer privacy and security—as well as business data—at risk.
Alternative payment methods (APMs), such as e-wallets and digital wallets are becoming more and more popular as a way for consumers to make transactions. Part of this is down to the rise in mobile commerce, as already mentioned above. However, APMs can be taken advantage of by fraudsters that have the credit card information of their victims.
Fraudsters can insert the card details into their own mobile wallet even if their names don’t match. Despite measures taken by Apple and the like to make integration more secure, fraud may still go undetected. As a merchant, you want to be able to offer a wide array of payment options at your online checkout but it’s vital that you invest in anti-fraud protection or fraud screening services in order to improve customer service and keep consumers safe.