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Ticket Fraud: The Dangers of Digital

posted on: Fri Nov 17 2017

‘Tis the season for attending live events! A search for “holiday concerts plays shows performances 2017” returns 25,200,000 results in Google. And if you search “tickets” for popular holiday events, you’ll get:

  • 866,000 results for Handel’s Messiah
  • 432,000 results for Nutcracker Suite
  • 83,900 for Manheim Steamroller and the Trans-Siberian Orchestra

That doesn’t even begin to touch upon professional sports tickets (search results: pro football, 28,800,000; pro basketball, 21,700,000; pro hockey, 14,200,000) or tickets for the upcoming 2018 Olympic Winter Games in PyeongChang, South Korea (search results: 795,000).

This level of consumer demand helped drive $15 billion in revenue in the secondary ticket market last year, with more than 130 active e-ticketing sites (and growing). And where there’s online revenue, there’s online fraud. eCommerce ticket operators face particularly unique challenges:

  1. Expectation of Immediate Fulfillment. Online ticket businesses often must decide in real-time to fulfill/not fulfill. Fraudsters exploit this tight decision window with rapid buy-and-resell tactics or last-minute purchases. Yet e-ticket operations can’t be too restrictive in the face of these schemes. False positives (legitimate transactions wrongly declined due to suspicion of fraud) not only lose revenue in the short term, but also jeopardize the lifetime value of that customer long term.
  2. Less Data Available for Fraud Screening. Online orders for physical goods typically include information like a delivery address. This data is helpful in fraud screening by providing additional checks such as geo-location, IP address, ISP, etc. But digital goods almost never require a physical delivery address, which limits data availability (and confidence) in decline/approve decisions.
  3. Higher Incidence of Mobile Transactions. Mobile ticketing transactions will double in volume over the next 12 months. At the same time, mobile fraud is increasing, with successful fraud transactions in the mobile channel up 35%. In addition, mobile wallets and emerging mobile payment alternatives are making it increasingly difficult to detect and defeat mobile fraud.
  4. Balancing User Experience with Risk. Greater competition and ever-increasing mobile transactions put huge pressure on online ticketing sites to minimize checkout friction. If a fraud prevention system slows down orders, the results can be devastating: a 1-second delay in page response could potentially result in $2.5 million a year in losses for an e-ticketing operation doing $100,000 in sales a day. 

What’s the solution? Enterprise-class fraud prevention solutions provide a multi-layered approach to fraud prevention. They make it easier for eCommerce operations to implement the 12 best practices that cut chargeback and fraud losses, minimize false positives, and reduce fraud mitigation expenses:

  1. Multiple, advanced screening technologies introduce more obstacles for fraudsters to overcome.
  2. Multi-stage checks deter fraudsters without impacting legitimate users.
  3. Chargeback alerts provide electronic warnings as soon as TC-40 claims are filed.
  4. Account registration provides richer fraud screening data and frustrates fraudsters.
  5. Biometrics help screen out bots and other automated fraud tools.
  6. Two-factor authentication protects customers from stolen data being used against them.
  7. Screening for all payment types ensures scalability into new channels, markets, or countries.
  8. Device and channel-neutral capabilities boost omni-channel revenue and security.
  9. Standardized policies help win representments against friendly fraud chargebacks.
  10. Real-time data orchestration provides additional context for borderline transactions.
  11. Advanced AI and Machine Learning technology help improve results in low-information scenarios, such as first-time fraud.
  12. Experienced human intelligence increases the odds of winning against strategic, adaptable human adversaries.

Discover how these best practices have helped online ticketing businesses fight the danger of digital fraud. Read the TickPick case study and find out how they cut their chargeback rate in half while doubling revenues from $25 million to $50 million.

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