How Gaming Is Great Online Fraud Prevention Prep for QSRs, Restaurants and Grocery Delivery
What does Candy Crush have in common with these online food & beverage businesses?
- Quick Service Restaurants (QSRs) offering mobile app ordering
- Casual dining restaurants providing curbside pickup
- Grocery stores delivering to local customers
No, it’s not that the Candy Crush game features edible treats while online food and beverage businesses sell edible treats. It’s the fact that online games sites have already experienced the wave of card-not-present (CNP) fraud and mobile payment scams that are currently hitting QSRs, restaurants, and grocery stores—especially those that are newer to the eCommerce arena.
- Payment Fraud and Manual Reviews. In online games and gaming, it’s just not feasible to bring play to a screeching halt for minutes or hours while a fraud analyst manually reviews a transaction. It’s either “yes” or “no” the moment the player clicks submit and then on with the game. The same deadline pressure applies to QSR mobile orders, restaurant curbside pickups and local grocery deliveries. As soon as an order is placed, food has to be prepared and/or readied for pickup or delivery. Of course, fraudsters try to take advantage of this deadline pressure—and the merchant’s desire to avoid declining borderline but legitimate transactions (called “false positives”). The result is order approval in the face of ambiguity and unacceptably high fraud rates.
- Card Testing. Criminals who have purchased stolen credit card accounts on the Dark Web need to know if they’ll work. Making trial online purchases (called “carding” or “card testing”) is how they find out. Low-value orders (sub-$10) leave as much credit as possible on the stolen account for future crimes, which means fraudsters look for sites where low-value orders won’t raise suspicion, like games and gaming sites. These sites typically feature sub-$10 purchase options, making them big targets. Sub-$10 orders are also common for QSRs (and to a lesser degree, restaurants and grocery delivery), which also makes them prime targets for card testing.
- Mobile App Fraud. Mobile is a huge revenue channel for online games and gaming sites. The same is increasingly true for QSR, restaurant and grocery delivery eCommerce operations, too. Unfortunately, the mobile channel is rife with fraud: 60% of overall fraud originates on mobile, mobile orders are twice as likely to be fraudulent, according to The Fraud Practice, and mobile transactions account for $2.33 in “true fraud costs” for every $1 of nominal fraudulent mobile cost, per LexisNexis.
- Account Takeover. Accounts on online games and gaming sites—especially accounts with auto-funding—are incredibly lucrative targets for fraudsters. It’s one reason why 4 million consumers were victims of identity theft or fraud last year. That same dynamic applies to QSR, restaurant, and grocery accounts. The ability to eat free forever (or at least until an account holder notices a problem) can be valuable personally to a fraudster or as an asset to be resold to less-than-honest consumers looking for a free lunch.
- eGift Cards. While eGift cards are NOT a big factor in the online games and gaming world, they are digital goods—just like online games are digital goods. And digital goods are more susceptible to CNP fraud for a myriad of reasons: no time to manually review orders, buyer takes immediate “possession” of the digital good, digital goods are extremely fungible and can be quickly turned into cash, etc. In fact, eGift cards were the biggest targets of fraud attacks between Black Friday and Christmas 2015 (according to a leading payment processor). In short, eGift cards may account for a small percentage of revenue, but as a digital good they can introduce a huge fraud vulnerability for QSRs, restaurants, and grocery stores.
Been there, done that.
There is a bright spot in this gloomy picture. Successful online games and gaming sites have already experienced all these fraud issues and figured out how to beat them. That’s why QSRs, restaurants, and grocery stores fulfilling online orders should take a page out of their books and employ the same successful antifraud systems and processes.
It starts with using an integrated, multi-layered approach that provides multiple “trip” points that deter and defeat fraudsters in real-time: velocity checks, quantified risk scoring, post-transaction dynamic scoring, real-time data orchestration, Artificial Intelligence (AI) and Machine Learning, mobile-optimized screening and rules, automated decisioning, account registration, biometrics, and more.
Want to know more about how to stop fraud from spoiling your online QSR, restaurant, grocery, and food and beverage business, while cooking up higher sales at the same time? Download the eBook "The Dish on Beating Online Fraud: How to Confidently Grow Sales in Food & Beverage."