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8 Capabilities Vital to Fighting Mobile Commerce Fraud

posted on: Thu Feb 18 2016

mobile fraudA few eye-opening facts about mCommerce explain why best-in-class fraud prevention for mobile commerce is no longer a “nice-to-have” but a “must-have.” And not just for eCommerce websites, but for brick-and-mortar retailers as well:

  1. Mobile transactions are 2X more likely to be fraudulent.1
  2. LexisNexis says hidden fraud costs for mobile transactions are 27% higher than those for standard online transactions—$3.34/mobile transaction vs. $2.62/online transaction2
  3. Mobile commerce is skyrocketing: for example, up 53% to nearly $1 billion on Cyber Monday alone3 and projected to hit $721 billion by 20174
  4. For brick-and-mortar retailers, mobile plays a huge role in “buy online, pick up in store” orders, which experienced a 28% jump in fraud during the 2015 holiday season5
  5. Even though “buy online, pick up in store” orders comprise a relatively small percentage of overall purchase volume for brick-and-mortar retailers, they account for 25% of ALL lost and stolen merchandise at brick-and-mortars6
  6. 43% of merchants say mobile is far riskier/somewhat riskier than conventional eCommerce.7
  7. 7 out of 10 merchants believe mobile transactions require special fraud prevention practices7
Obviously, the longer you delay, the greater your exposure and risk. But most organizations lack the expertise, resources, time, and budget to develop their own best-in-class mobile fraud prevention solution. Here’s a quick summary of the 9 best-in-class capabilities you should look for in a fraud prevention solution so you can protect yourself against this rapidly growing threat.
  1. Know if a mobile device is being used. Mobile transactions are 2X more likely to involve fraud. Your fraud prevention solution should be able to alert you to the fact that an order is originating from a mobile device so you can take steps to protect yourself.
  2. Identify type of mobile device being used. iPhones, iPads, Android devices, Windows tablets, etc. all have different fraud profiles. Knowing the type of device that is being used in a mobile transaction allows you to screen accordingly. Not too much screening, so you can avoid sales-killing friction at mobile checkout. Not too little screening, so you can prevent product losses and higher chargeback penalties.
  3. Pinpoint the “real” location of the mobile device. If you can’t determine a mobile device’s true location, fraudsters can mask their identity and defraud you. Kount technologies like Proxy Piercer™ help reveal the actual device location to fight fraud better. For example, if the fraudster says they’re in “Chinatown” but Proxy Piercer says they’re in “China,” you can take further steps to obtain additional verification and ensure you’re not getting defrauded.
  4. Determine if a pre-paid device is being used. Fraudsters are more likely to use pre-paid devices. Best-in-class solutions like Kount alert you when a device is pre-paid so you can better assess the risk and respond accordingly.
  5. Know if the phone number being used is a forwarded number. Fraudsters using stolen mobile devices to conduct fraud will forward calls from a stolen or compromised account to their own phone. Kount technology alerts you if a phone number is forwarded so you can thwart this scheme.
  6. Identify if it is a card-present or a card-not-present transaction. Top solutions like Kount identify transactions coming from card-present mobile POS systems like Square, Intuit GoPayment, etc.—which are less risky—versus transactions from card-not-present mCommerce—which have higher fraud levels—so you can apply the appropriate level of scrutiny.
  7. Associate other transactions with the device. Kount capabilities like Order Linking and Personas can reveal if a mobile device has been associated with prior fraudulent behavior—even if that behavior was not directly with your organization. This alerts you so you can review or decline the transaction.
  8. Ascertain if financial information is compromised. Kount technology links the mobile device to past transactions from that device, PLUS also alerts you if other non-device attributes associated with that device—for example, credit card account number, email address, ship-to address, etc.—have been associated with past fraud activity.

Want to know more about mobile fraud and all the ways you need to protect your organization from this rapidly growing threat? Check out the eBook “Nowhere to Hide: Uncover Mobile Fraud Before It’s Too Late.”

SOURCES: 1 Fraud Practice, Payment Trends and Security, David Montague 2 http://www.lexisnexis.com/risk/insights/true-cost-fraud.aspx 3 http://www.comscore.com/Insights/Press-Releases/2015/12/Cyber-Monday-Surpasses-3-Billion-in-Total-Digital-Sales-to-Rank-as-Heaviest-US-Online-Spending-Day-in-History 4 http://www.statista.com/statistics/226530/mobile-payment-transaction-volume-forecast/ 5 http://www.nasdaq.com/article/higher-level-of-fraud-online-expected-this-holidayshopping-season-20151118-00631 6 http://www.lexisnexis.com/risk/insights/true-cost-fraud.aspx 7 info.kount.com/mobile-payments-reports-2015