Fraud detection acts as the department of defense when it comes to e-commerce technology. In the absence of solid fraud detection measures, customers may start to lose a little faith in e-commerce stores. Cyber fraud is as global as e-commerce itself and it is becoming more sophisticated with time. Global e-commerce growth rests on constant innovation in fraud technology and best practices. Innovation is the only option to keep up with the relenting efforts of bad actors. The financial and branding consequences of standing still are too great to ignore.
Worsening problems
Unfortunately, as e-commerce continues to grow, fraud seems to be growing accordingly. According to DigiCommerce’s partner, Forter 2018-2019 saw a 20% increase in total fraud. They reported different types of fraud , all of which saw a staggering increase. Buy online and return in store fraud (23%), account takeover attempts (164%), returns abuse (33%), card-not-present payments fraud (40%) and loyalty account fraud (275%). This troubling rise in fraud is an indication that traditional fraud systems are simply not up to the task of effectively tackling contemporary problems.
Damaging for branding
This has a negative impact on a brand because a perceived vulnerability to fraud makes it difficult for businesses to compete on a level playing field. Ideally, businesses should be competing on price and quality of product or service as oppose to concerns about the security of the e-commerce buying process. Unfortunately, due to a combination of technological blind spots, unequal regulatory enforcement across territories, data storage and privacy issues, these issues persist. When you factor in more nimble cyber criminals with access to better technology, it give you an idea of the challenges facing cybersecurity.
What is at stake
No business is going to get it right 100%, at least not yet. But those who do not get it right are jeopardizing their chances of staying relevant. Customers need to trust the businesses they patronize. In our digitized world, that very much includes cybersecurity. It is the responsibility of managers to ensure businesses have the most updated fraud detection and cybersecurity measures. This ensures customers are exposed to as little risk as possible. In the past few years we have seen the effects data breaches and cyber fraud have had on some big global brand. Business anxiety over fraud can have the effect of limiting new products and markets.
Outdated
However, the truth is that many legacy systems cannot keep up with the demands of today’s e-commerce ecosystem. In contrast to updated systems, they present more gaps for fraudsters and have lower accuracy. Due to reactionary manual review teams as oppose to proactive ones, these systems are not as agile as they once appeared. This has repercussions for revenue depending on the business sector. Even more so in the post social distancing world.
Remedies
Implementing a centralized digital infrastructure is the best solution. There are some pitfalls to a centralized systems. However, adequate measures can be implemented to mitigate them. According to Forter, an effective fraud detection system must have the following: Firstly a global network is needed to reflect the global nature of the current and future challenges. Secondly, machine learning technology capabilities must be deployed to keep pace with fraudsters. The same for advanced fraud analytics technology. Lastly, managers must start to deploy tailored fraud models which add that extra layer of security. This will makes it harder for cyber criminals.