By Jimmy Fong, CEO, SEON
Many businesses today still don’t realize that social media and digital profiles are fast becoming validation of a “good” customer. This is important, as the ubiquity of a social presence is a much stronger modern-day validator of identity for any new online customers looking to buy or use services.
Social media channels provide us with a platform to share updates about our lives, chat with friends and meet new people. For businesses however, the benefits of such platforms can be far greater, especially in the battle to prevent online fraud. Increasingly, forward-thinking companies are able to leverage open data accumulated through social media to validate potential customers more efficiently and effectively than before.
Follow the Footprints
That’s because every time we log on we inevitably leave a footprint of our activity. This doesn’t just happen on social media sites, but across the whole of the internet. As a sector, we refer to this information as either an individual’s digital footprint or their social footprint, depending on where exactly it was lifted from. With the right tools, this information can offer a key to evaluating whether a user is genuine, or not.
Unfortunately, many businesses remain in the dark about this potential and instead rely on antiquated validation processes to get this important job done. For the most part, traditional validation methods like manual reviews require significant time and cost expenditure. In addition, these techniques often interfere with the experience of a user when making a purchase, which, in turn, can put customers off from completing transactions.
An Effective Choice
By contrast, social media footprint checks provide a frictionless, rapid, and definitive approach to customer verification. Particularly when used as part of a broader digital footprint check, the method has proven to deliver outstanding results. In fact, we have collected our own data, which indicates that over 87 percent of fake and fraudulent customers don’t have a robust social footprint.
So, why is this the case? Well, social media accounts take longer to set up than email addresses, which are incredibly quick and simple. And, while fraudsters may devote time to setting up a fake social media profile, it’s highly unlikely they will have the time or resources to commit to building a comprehensive social footprint across that account. Ultimately, doing so would be an ineffective use of labor and represent poor ROI, which is why fraudsters avoid it altogether.
Retain an International Outlook
Therefore, social footprint checks represent one of the most effective ways to eliminate the potential of fake, or fraudulent customers from one’s business. However, businesses that want to invest in such solutions should do some research before diving in. For one, it’s essential to deploy a system that’s able to analyze a vast array of social media platforms, especially when serving an international customer base.
Whereas Facebook, Twitter, Whatsapp and Instagram dominate social media in the West, sites like Weibo, QQ and WeChat are popular in the East. Without the ability to assess users across these sites, businesses remain as vulnerable as ever when serving international customers.
Mitigating Risk
With these solutions in place, businesses can dramatically reduce the risk of fake users accessing and exploiting their platforms. Of course, this not only helps to limit the risk of fraudulent transactions, but also helps companies to ensure they’re enacting the most stringent know-your-customer (KYC) protocols. In doing so, businesses can verify they are only serving legitimate users, which is important for several reasons.
For one, this extra care can help businesses mitigate the risk of illegal activities (e.g., money laundering occurring across their sites, or platforms). In recent times, the scope of anti-money laundering (AML) legislation, particularly in the United States, has become much greater, with businesses even indirectly involved in the process now subject to fines, or even criminal convictions.
Staying Ahead of the Curve
This change was underlined in the “AML Act of 2020,” which marked the most sweeping overhaul of AML policy in nearly 50 years. In addition to this, recent geopolitical events, including the Ukrainian invasion and the subsequent sanctions placed on Russian nationals have further increased the need for businesses to ensure they know who their customers are, and made effective KYC protocols more essential than ever.
Fortunately, the process has never been more straightforward. Nowadays, businesses can adopt effective KYC solutions, while also looking at broader digital and social signals, which provide an additional layer of security. When combined, these different approaches provide an incredible level of protection, offering more than just one perspective when it comes to detecting fraud. Better still, such solutions allow this process to happen in a way that doesn’t deter customers from completing transactions, so will not lead to a downturn in sales, or sign-ups.
Step in the Right Direction
By integrating solutions, which leverage social and digital footprints to validate ‘good customers’, businesses can go further in their fight to prevent online fraud. This modern approach to fraud prevention is currently needed more than ever, particularly as rates of online fraud continue to rise. Thankfully, such solutions have never been so affordable and accessible to businesses of all sizes.
For more information about SEON, please visit: www.seon.io
