Retail fraud gets even more dangerous
Retailers are so worried about fraudulent purchases online, many say they’re rejecting legitimate transactions out of fear that they may be fake.
Experian’s Global Fraud and Identity Report shows that fraud trends and patterns continue to grow across the globe. The research found that most businesses — 72 percent — cited fraud as a growing concern. Six out of every 10 businesses are experiencing the same or more fraudulent losses online compared with a year ago.
The research also shows that businesses need to better identify their customers to help combat online fraud. Currently, most businesses tend to demonstrate suspicion when it comes to preventing fraud, following a route of detection rather than permission or trust: 71 percent know that they deny more transactions than they should. This doesn’t just lead to a loss of sales; it’s also likely to damage the lifetime value of that customer.
Business leaders agree that if they were more precise in identifying customers and avoiding denial of real transactions, they would see an increase in revenue. In fact, 84 percent of businesses say the need for fraud risk mitigation could be reduced if they were certain about customers’ identity.
As businesses undergo digital transformations, they recognize the importance of trust and the need for technology to deliver it. “Whether it’s in our favorite coffee shop or shopping online, being recognized by the people we do business with goes a long way,” said Kathleen Peters, Experian’s senior vice president of Global Fraud and Identity. “Recognition helps to stimulate trust, and trust is what makes all of us feel safe and protected. Trust is the currency of digital commerce. Technology is the enabler that underpins it.”
Findings from the study show that while consumers want to be recognized, they also expect online banks and retailers to do everything they can to protect their information and secure their transactions. Nearly seven out of every 10 consumers like security protocols when they transact online, because it makes them feel protected. But that doesn’t mean they like too many hurdles and inconveniences. The most effective fraud prevention and identity strategies keep people safe without disrupting their experience.
“Fraud is always evolving, and fraudsters are becoming more resourceful. Good fraud detection requires multiple strategies, including better customer recognition,” added Peters. “Simply put, the better you recognize your customer, the better you can recognize fraud.”
To develop the study, Experian interviewed more than 5,500 consumers and 500 business executives in 11 markets around the world. Additional findings from the annual fraud report:
- One out of every four consumers has abandoned a transaction because setting up a new account required too much information.
- 35 percent of consumers would transact more online if there were fewer security hurdles.
- Only 40% of businesses are “very confident” in their ability to detect fraud.
- 52 percent of businesses are still using passwords for fraud detection and protection.
- 75 percent of businesses expressed interest in more advanced measures that have no impact on the digital customer experience.