At its humble beginnings, ecommerce fraud was conducted by tech-savvy criminals, dedicated to finding loopholes in the back end of websites to steal from brands and shoppers. As online buying transformed and rose to rival brick-and-mortar in popularity, fraud changed with it. Advanced digital tools, readily available information, and new ways to buy online, unfortunately, altered the fraud landscape into a widely accessible territory for criminals to explore.
Emergences of post pandemic fraud
The pandemic also modernized and evolved the fraud space into what we know and recognize today. Forced into lockdown, businesses and consumers alike eagerly turned to ecommerce to sell and spend – both money and time. Since then, ecommerce fraud somehow transitioned into an ideology of “victimless crime” in the minds of criminals. The mindset adopted here was that if a large corporation loses out, there is no harm to everyday people.
Interest in victimless crimes – morally light, risk of prosecution low – resulted in fraud trends that have remained since lockdown. Clean fraud, for example, occurs at the onset of a transaction with a customer having no intention to pay. Triangulation schemes have also been spotted more. This crime involves an unsuspecting customer placing an order on a fake marketplace, in which the fraudulent seller receives payment information and then steals credit card information. Or there’s re-shipping: when a “work from home” package receiver forwards stolen goods to a pre-designated address.
With so many kinds of fraudulent activity occurring online, how can brands ensure their protection? Fortunately for online stores today, many solutions (both tangible and conceptual) are designed so walls commonly built to prevent fraud do not need to be so high.
A layered approach to prevention
While the fraud landscape shifted to accommodate new variations of online criminal activity, so did mitigation strategies. The best approach? A multi-layered strategy that touches upon every aspect of potential threat. With such a dynamic territory for fraudsters to take advantage of, investing too much time, effort, and money in just one prevention method can leave brands vulnerable.
Manual and automated processes should play, at the minimum, a role in a brand’s security operations. Frequent data collection to identify weaknesses throughout the checkout process, and performing velocity counting exercises to note shopper behavior trends and abnormalities, should also be a baseline in fraud prevention. Despite the importance of these exercises, they are quite tedious for workers. Enter the greatest arsenal in the battle against fraud: technology.
With daily advances in innovation, utilizing the powers of AI and machine learning gives brands a quicker response time against threats. With AI on their side, brands can streamline data aggregation so human touches of business can be implemented in more important areas. Understanding where value lies with AI – instantaneous data collection, sorting, and pattern identification – will ultimately give brands a leg up in understanding where and why fraudulent activity occurs.
Finding fraud…and using it
For brands, finding just one incident of fraud is reason enough to sound alarms and heighten security measures. With so many different variations of fraud out there today, brands might not think their internal resources are enough, or that AI and machine learning are too heavy an investment. As an alternative perspective, it is in a brand’s best interest to look at the solutions for fraud prevention as a symbiotic relationship – and then let a few aspects of fraud sneak in the door.
Leveraging fraud may not seem like the most intelligent solution, but since fraud is constantly evolving, noting when, where, and what fraudsters target can help brands understand where their vulnerabilities lie, and fix them.
While it is a high-risk-high-reward approach, in the end crime is a part of doing business that will never go away. With fraud rates outpacing the considerable good growth of a company, why not use fraud as a brand’s saving grace? Letting it beyond the wall and into your ecosystem will help identify emerging threats. As the phrase goes, keep your friends close and your enemies even closer.
