Digital Merchants Too Focused on Fraud at Checkout: Report

Digital Merchants Too Focused on Fraud at Checkout: Report

January 10, 2019

E-commerce merchants still focus most of their fraud prevention efforts at the point of the transaction rather than expanding those efforts to meet an evolving threat, a new report asserts. Online retailers will lose $130 billion over the next five years, according to U.K. research firm and consultancy Juniper Research, while they continue to fight an increasingly complex, cross-channel threat using obsolete technology.

In addition to technology that assesses the likelihood of fraud at checkout, researchers said an effective layered solution should include systems that verify identity during login and behavior while shoppers are interacting with the site. According to Online Payment Fraud: Emerging Threats, Segment Analysis & Market Forecasts 2018-2023, merchants are hesitating to implement comprehensive fraud detection and prevention systems like this because they perceive the cost to be too high. As CNP fraud becomes more sophisticated, however, newer layered fraud detection and prevention systems that incorporate authentication and behavioral analytics will provide more ROI than merchants think, said the report's author, Steffen Sorrell.

"A layered FDP solution naturally helps directly preventing fraud, but it also offers major gains in terms of recovering potentially lost revenue through false positives," said Sorrell. "This is something about which retailers remain undereducated, and has allowed fraudsters to capitalize on relatively low FDP spend."

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