E-commerce fraud: Are tech prevention systems the solution?
By nature, the e-commerce industry lends itself to criminal activity, which is why the issue of online fraud continues to be one of its biggest threats.
Although online payments open up windows for all sorts of crimes to be committed, some of the most serious tend to be associated with identity theft and phishing.
One year on from the Equifax personal data breach, which saw unauthorised access to its customer credit report databases expose the confidential data of over 143 million individuals, no real changes have occured to prevent similar scandals from happening.
Instagram and Facebook also provide a platform that allows merchant fraud to become increasingly common. These social media networks offer an opportunity to easily generate a sales process for products that are either offered but never shipped or, instead, counterfeits sold to customers as genuine products.
Given that online gift cards can easily be hacked, the issue of fraud is also a big problem for e-gifting. Electronic gift cards, for example, can be bought with stolen credit cards, which makes them easily re-sellable and means criminals are able to take the cash. US multinational retail company Walmart has recently been sued for taking part in a gift-card hacking scam.
In the US, 2018 is predicted to be a significant year for e-gifting, with sales of online gift cards predicted to exceed US $160 billion. Industry experts have even dubbed it ‘the year of personalisation,’ expecting sales of product-based gift cards as opposed to amount-based gift cards to increase, along with personalised messages.
The development of fraud prevention services has therefore never been more important, and this has been done via a number of methods that range from machine learning and automated workflow, to insights dashboards and supported platforms.
One retail startup with a pioneering fraud prevention solution is branded gifting startup Jifiti, who are experts in the gift card industry and recently saw Yaacov Martin, the CEO and Cofounder, author an article in Total Retail. Aside from their gift registry and e-gifting systems, its fraud prevention technology has earned itself a 98.14% approval rating. With the industry approval standard recorded at 70%, Jifiti’s stands head and shoulders above the rest, lowering the number of declined transactions, which often poses a large problem for the customer, to just 2%.
With e-commerce fraud rates far from decreasing, more and more e-commerce businesses are investing in fraud prevention technology by default. However, with systems still very much developing, both customers and merchants remain in the process of familiarisation with the technology; a process which could take some time.
Disclosure: This article includes a client of an Espacio portfolio company