Now that Covid-19 lockdowns have changed shopping habits dramatically, many more people are heading online to purchase items like groceries, medications and other supplies normally purchased in a physical, bricks-and-mortar store. The change has also meant online shoppers are buying in larger volume than previous levels seen before the pandemic.
With this switch in online shopping behavior, it is now more difficult for merchants to distinguish between fraudulent and authentic buying. How can businesses mitigate against fraud in this unusual time? Card Not Present spoke to Beth Shulkin, vice president of global marketing with Ekata, for some tips on navigating the new landscape.
CNP: How has consumer shopping behavior changed during the Covid-19 pandemic?
Shulkin: Overall, there has been a drastic increase in both frequency and volume of online shopping. We are seeing this trend specifically in retail, home office supplies, home exercise equipment, grocery, and food delivery.
Shoppers that typically bought four times in a given month from their favorite e-commerce websites (especially home supplies websites, like Amazon) are now shopping online far more often. They are also making larger dollar purchases (compared to past patterns) as they stock up on supplies and groceries to survive the unknown time of quarantine and lockdowns being implemented by governments.
In addition to changes in retail and grocery shopping, customers are also ordering more frequently from food delivery companies. For example, customers who ordered food delivery once per month before the pandemic, may now be doing so as often as 20 times per month.
Before pandemic lockdowns took effect, high-volume purchases or out-of-character buying behavior were often indicators of fraud and/or ATO. How have current trends changed that?
Shulkin: The current pandemic has made high-volume purchases and out-of-character buying behaviors more of the new “quarantine norm.” As a result, it becomes increasingly difficult for merchants to distinguish between their good customers and the fraudsters. Thankfully, there are still many things that are predictive of fraud regardless of pandemic-related changes. For instance, identity attribute mismatches, burner phones, and throwaway emails are always red flags.
How can merchants tell the difference now?
Shulkin: Merchants can tell the difference between fraudsters and good customers by evaluating customer contact details (name, phone, email, etc.). Data from multiple sources can help find unique markers that identify the actual human behind a digital identity. Verified identities and well-established contact points are always signs of a good customer vs. a fraudster. As a plus, device data and identity verification data both provide strong risk signals that are not as subject to the changing market conditions.
What other key indicators or best practices do you suggest for merchants trying to mitigate fraud yet also allow for a seamless customer experience amid current pandemic online shopping patterns?
Shulkin: As things continue to change during the pandemic, merchants should carefully analyze new patterns that emerge. Merchants that keep a pulse on the changing circumstances will be better able to catch nefarious players, and understand the context that brings consumers to their platform, resulting in fewer surprise chargebacks and an overall better online experience.
While merchants have shifted more to machine learning models in recent years to catch fraudsters, the current environment has resurfaced the importance of human involvement in the fraud detection process. One way merchants can layer in human analysis on top of their machine learning models is by updating rules-based models based on the human analysis of current trends. Those that do will be able to better identify good customers among the fraudsters, even amid the current pandemic online shopping patterns.