Well-implemented fraud prevention measures can ensure your business thrives today and is future proof for tomorrow.
By Patrick Kelly, Americas Head of Sales, ShuftiPro
The explosive growth of Ecommerce during the pandemic has been well reported. Less known is the role of social media influencers in this growth. A recent report found that 60% of consumers have been influenced by social media or blogs while shopping online. And along with the social media component of online sales, opportunities for online fraud have inevitably appeared.
According to estimates, online business losses were at least 20 billion U.S. dollars globally in 2021 – up more than 14% growth from 2020. More scams and attacks put businesses under stress. In 2021, the most common fraud type was chargeback fraud also known as friendly fraud. Almost 40% of survey respondents (including customers and sellers) experienced this type of fraud worldwide. It impacted 30% of online sellers in the US alone. The new scams (such as card testing, identity thefts and account takeover) put additional pressure on businesses to take an action and implement new strategies and technology to detect and prevent future scams and attacks.
Social media fraud causes problems for both users and businesses. Companies need to leverage social media for sales and help to connect with global customers. But social media crimes have been increasing, with victims losing more than just money. The online scam industry is becoming more organized and involves criminal groups. Today, frauds are less focused on non-targeted users and are victimizing specific groups to increase conversion rates.
Three steps to reduce online fraud
Businesses can protect themselves from any attacks and frauds with well-developed and strategized measures.
First, a key to protecting the business is to have an instant and accurate identity verification measure. Social media is an attractive target for threat actors. They can reach billions of people due to the lack of identity verification measures on social media platforms. According to the Federal Trade Commission’s latest Consumer Protection Data Spotlight, the largest number of reports came from users who were scammed trying to buy something they saw marketed on social media.
Social media is not the only platform that fraudsters took advantage of during the pandemic. Remote and hybrid working was another area. Many businesses chose to adopt permanent work from home and hybrid policies. Identity verification is now more important than ever as cloud usage increases. Businesses can reduce risk by implementing Know Your Customer (KYC) into the onboarding process to effectively verify customer identities.
To steal an identity or misuse access protocols or employee credentials are the initial steps to fraudulent activity or a data breach. According to the Aite-Novarica Group, 47 % of Americans experienced financial identity theft in 2020. Before the pandemic identity fraud was the second concern of consumer complaints. More than one in four people who reported monetary fraud in 2021 said it started on social media. Failing to properly verify identity and implement robust KYC policies can damage the business not only its economic status but also its reputation.
Second, businesses need robust Anti-Money Laundering (AML) screening measures to detect, flag, and report suspicious transactions. Businesses need to have technology-powered protection to implement robust AML measures. Artificial Intelligence (AI) and Machine Learning (ML)-powered technologies offer instant and accurate solutions to prevent known threat actors from processing transactions. AML systems can search for risks from large volumes of data and detect potential threats.
Finally, it is vital to have additional preventative measures that go beyond the technology. Unfortunately, KYC and AML are not always sufficient. On some occasions people with legitimate identities that can bypass KYC and AML checks are also capable of fraudulent activity. Therefore, businesses need to constantly monitor transactions to identify low, medium and high-risk customers. Businesses can mitigate the potential fraud by analyzing billing and shipping information, as well as IP addresses of customers. Early detection of any inconsistencies can help businesses from damage.
Reminder
Businesses that are not experienced in fraud prevention technology or did not invest in any measures are often the main targets of fraud attacks. Employing social media influencers in marketing can increase the risk unless safeguards are implemented.
Protection comes in layers. Take a step-by-step approach and begin working on your strategy to mitigate the risks of online fraud. Accurate and instant identity verification is necessary to have and start with. Identify each identity that enters the system under certain AML and KYC measures. Lastly, implement AI-ML-driven technologies to analyze trends with constant transaction monitoring.
A vulnerable system that is open to attacks not only costs a significant amount fiscally but also damages a business’ reputation. Well-implemented fraud prevention measures can ensure your business thrives today and is future proof for tomorrow.
About the Author
Patrick Kelly is an experienced professional in digital identity and multi-modal biometrics designed “to prove you are who you say you are.” He is head of sales for ShuftiPro in the Americas. Patrick can be reached online at our company website https://shuftipro.com/
Source: www.cyberdefensemagazine.com