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Do Brick-and-Mortars Need Best-In-Class Mobile Fraud Prevention?

posted on: Thu Feb 25 2016

mobile fraud preventionThis past holiday season, more brick-and-mortar retailers than ever offered “buy online, pick up in store” service. Obviously, mobile plays a huge role in these transactions. But so does fraud:

  • Fraud rates were projected to jump by 28% for holiday “buy online, pick up in store” orders1
  • Although a relatively small percentage of overall purchase volume, fraudulent “buy online, pick up in store” now account for 25% of ALL lost and stolen merchandise for brick-and-mortar retailers2

If you’re a brick-and-mortar retailer starting to see higher chargebacks from the holiday season, mobile fraud could be the hidden culprit. After all, mobile transactions are 2X more likely to be fraudulent.3

What’s more, if you offered “buy online, pick up in store” service, you could end up suffering big product losses on top of those chargeback fees and penalties. That’s because “buy online, pick up in store” fraud has outpaced too many fraud prevention systems.  

For example, there’s the real-life case of Micro Center, a national retailer of computers and electronics. They were hit by a fraudster using stolen credit cards to fraudulently order via mobile or online, then quickly picking up high-end Apple products, MacBook Pro notebooks, and iPads in store. By the time their fraud prevention system flagged the crimes, the criminal was long gone and product losses had reached thousands of dollars.

After investigating thefts at Micro Center stores in Kansas City and Chicago, Skip Meyers, Director of Loss Prevention, was able to track down the fraudster’s identity. This led him to her Facebook page where she brazenly bragged about her cross-country crime spree and boasted about “ripping off” stores with bogus credit cards. She also revealed (stupidly) her upcoming fraud targets.

With the targeted Micro Center stores on alert, the suspect was finally arrested when she attempted to repeat her scam in Ohio. A search of her vehicle recovered stolen items from Micro Center, plus Home Depot, Target, and others.

This incident is just one example of why brick-and-mortar retail merchants need best-in-class fraud prevention for mobile orders. It’s not just a “nice-to-have” but a “must-have.”

What does best-in-class mobile commerce fraud prevention look like? Read our blog post on the 8 Capabilities Vital to Fighting Mobile Commerce Fraud. Kount delivers on these capabilities to help you prevent mobile fraud and cut chargebacks by 20% to 50% or more. If you are seeing an increase in chargebacks we recommend you read the “Beat Those Post-Holiday Chargeback Blues” eBook to learn the key capabilities needed to protect against chargeback fraud.

1 http://www.rttnews.com/2582289/higher-level-of-fraud-online-expected-this-holiday-shopping-season.aspx, 2 Fraud Practice, Payment Trends and Security, David Montague, 3 http://www.consumerreports.org/cro/news/2014/04/smart-phone-thefts-rose-to-3-1-million-last-year/index.htm

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