A new report from Kount and Javelin Research finds the top three fraud threats for retailers are stolen card fraud, account takeover, and fraudulent new accounts.
Javelin surveyed hundreds of respondents across the retail, restaurant, insurance, and financial industries and found more than 40 percent of businesses say fraud is getting in the way of expansion into new digital channels and services.
The report also found that 48 percent of consumers are more sensitive to anti-fraud measures that disrupt their online experience than they were a year ago.
“This means that retailers and restaurants have an increased imperative to balance fraud mitigation and customer experience,” said Kount in a release on the findings. “Yet, only 64 percent of organizations’ customers have confidence in the security of their digital channels.”
Unsurprisingly, the retail industry faces the biggest risk from fraud. The report finds that many still lag behind in fraud prevention technology, with 43 percent of retail merchants noting they still authenticate users with only usernames and passwords.
Restaurants unprepared for risk of digital business
The research also revealed 70 percent of restaurants surveyed said they plan to invest in digital products and services within the next year. But despite intentions to enhance user experience with digital technology, fraud management isn’t top of mind. The survey found only four percent of restaurants ranked “managing digital fraud risk” as a top challenge for digital innovation, compared to 12 percent of all businesses.
The report includes several recommendations for fraud prevention, including:
- Bring fraud management and cybersecurity teams into early development stages, to prevent a scramble after an attack.
- Identify the key fraud risks facing each part of your business now, and down the road.
- Minimize friction for customers with well-informed, risk-based authentication.
- Move away from one-time passwords.
- Modernize authentication measures.