Ecommerce fraud has become a significant concern in today’s economy. People are flocking online more than ever before to make purchases. Some retailers are also focusing more on their digital commerce efforts than their in-store work.
But more people are engaging in ecommerce fraud than ever before, as businesses lost about $17.5 billion in online fraud this past year. That total is expected to rise to $20 billion in 2021, especially as people become more reliant on digital sales and less on going to traditional outlets for things.
Many of these losses come from synthetic ID fraud. The practice entails a user using another person’s identifiable data to acquire something online. The person who makes a transaction is not the person that the website assumes is making the deal.
People are using digital commerce services more than ever, but there are worries about the fraud mitigation efforts these companies use. Some businesses are unaware of what they can do to stay safe while online. Others might not be willing to evolve their websites to make them more secure and functional.
New efforts to mitigate the risks of online fraud are critical for the industry’s survival. The threat of synthetic ID fraud is too significant for people to ignore, as are various other worries. But artificial intelligence can be critical to preventing possible threats from becoming worse.
Synthetic ID Fraud Concerns
The most significant worry about synthetic ID fraud is that it isn’t easy for traditional fraud mitigation measures to identify. Sometimes synthetic fraud entails using one piece of identifiable data to move forward. A person’s Social Security Number could work, but the person’s address or name may not be there. A website could assume the customer is the one that links to the SSN in this example.
Sometimes the synthetic fraud will entail behaviors that are similar to what someone might utilize online. These issues are impossible for some old online platforms to recognize. It becomes easier for people to get away with fraud this way, forcing businesses to write off their losses.
Other Fraudulent Activities
Online fraud can occur on any shopping website through many other methods:
- A person might steal credit card data and test it on a website. The person can test the card to see the possible credit limit on that card. Once someone knows that a card works, that person will want to continue making expensive transactions on that card.
- People could steal passwords and other bits of verification data when getting online. A person might use the data one finds to impersonate an actual person’s account.
- Interception fraud can occur when someone uses the same billing and shipping info on a stolen card, but the person will intercept the goods in transit. The customer might contact a customer service department to change the shipping address right before moving out of a warehouse.
Many other fraud instances could occur, and they can all be dramatic. The worries that people have surrounding fraud can be dangerous and risky, but they don’t have to be worrisome if the best measures work. Artificial intelligence is a suitable solution to use, as the next section shows.
AI Is Necessary
Artificial intelligence-based solutions will be critical for helping businesses stay safe and to avoid fraud. AI can review customer actions and compare them with general signs of fraud. For example, an AI system can flag situations where someone tries to commit interception fraud by changing the shipping address after placing the order.
An AI system can use a database that highlights general examples of fraud and common warning signs. The AI review will compare multiple activities in a transaction with the known fraud instances and then flag transactions that may be a concern.
Depending on the setup a business uses, the company can either alert a customer or block the transaction altogether. The held transaction could also be secured if the customer provides enough data to confirm one’s identity. The work can be extensive at times, but it is about ensuring everything happening online stays safe and secure without risking possible losses on either end of the deal.
There are many ways how an AI system can work:
- Customer behaviors can be gauged versus what people normally do on a website. A website can review when someone gets online, when that person is purchasing things, and where someone accesses a website.
- A system can also review the payment methods that people use. An entity that uses multiple payment methods might be trying to use many accounts for the same item.
- Some parties may be using foreign sources for funds. They might use credit cards issued by banks in different countries. Others might be using funds through accounts that support cryptocurrencies that some retailers might not accept for payment purposes.
A business can use multiple third-party programs to identify connection sources and to verify addresses and other details. The business can include these programs surrounding whatever one feels is right for use.
The goal of the analysis is to reduce the risk of chargebacks by identifying fraudulent cases as soon as possible. All activities can be reviewed versus whatever norms the website experiences.
Responding Is Critical
All online retailers must be ready to respond to potential fraud cases. The process requires twenty-four-hour support that can identify anything new.
But the response should include a personal touch. A company must review the norms that customers express and find cases where something is outside the ordinary. It becomes easier for businesses to reduce their fraud risks when they recognize what is working and what they should be doing when keeping their efforts afloat.
Fraud is a significant worry that can impact any business, but it will be easier to rebound and reduce risks if the right measures work. Businesses can stop various concerns if they know what they are doing while recognizing possible changes that might occur after a while.