With the advent of the EMV chips in credit and debit cards, fraudsters are being forced to look elsewhere. While it may be a little annoying having to wait for the terminal to connect at the checkout, it is more annoying for the fraudsters who are no longer able to steal your data.
Online fraud rises as card fraud drops
Fraud prevention company, Forter, said that in 2016 the total number of online fraud attacks rose by 8.9 percent from the previous year. This is mainly due to the increasing use of EMV-enabled credit and debit cards. EMV – named for its creators, EuroPay, MasterCard, and Visa – is a chip embedded in the card that stores the data, similar to the magnetic strips on the back. The big difference, though, is the security. The chip is much more secure in the storage and encryption of data, and the need to insert the card into the terminal and enter your PIN makes scanning and cloning the card almost impossible.
Fraudsters have now taken to more online activity since online domestic orders are 79 percent more likely to result in fraud. And this is apparent in the figures. Forter, in association with the Merchant Risk Control, said that the rates of fraud are uneven, although Apparel, who has not been an attractive target previously due to its low value, has seen an increase of 69.9 percent. Forter said that this may be due to new online fraudsters who have moved away from cards since the EMV became popular. Many people are comfortable with online shopping and returns, and this can have a dramatic effect on the increase in online fraud.
Food and beverage fraud is rising massively
According to Forter, certain fraud attack areas have actually seen a reduction in fraud over the last 12 months. Luxury goods fraud dropped by 8.4 percent and durable goods fraud witnessed a 22.6 percent drop, while electronics went down just 1.8 percent and travel fraud decreased by 33 percent. However, curiously, food and beverage fraud increased by 49.8 percent. This could signify an area of fraud prevention that should be investigated more.
Forter are staying one step ahead
Michael Reitblat, CEO of Forter, said, “this year we have established a new norm for online fraud, which is 2.5 times higher than it was two years ago.” He also goes on to state that the trick is to get there before the fraudsters do, being one step ahead. In this era of online ordering and competitive merchants, fraudsters abound, knowing that the merchants are under increased pressure to fulfill orders on time in a very competitive marketplace. The increase in pressure to compete and give that customer experience that drives repeat custom, merchants are cutting corners in screening buyers. This makes it easier for the automated systems used by the fraudsters to increase their activities. According to Reitblat, there was a 79 percent increase in domestic fraud over the Christmas and New Year holidays.
Changes in tech trigger new fraud methods
Just as the technology to prevent it changes with the times, so do the methods used by the fraudsters. As a new defensive system comes around, fraudsters attempt to circumvent it. A solution to fraud from three years ago would be useless today, as fraudsters have already bypassed the security with almost matching technology. Fraud now uses updated platforms and methods, constantly changing with the times and the tech.
Merchant card purchases are guaranteed
Forter, along with other companies like Signifyd, Riskified, and Radial, approves and guarantee merchant card purchases, giving yes or no responses to transactions. If the approved transaction is proven to be fraudulent, Forter pays out to the merchant. With their centralized solution for fraud prevention, Forter can see the movements of fraudsters and follow the trail of identifiers to stop t hem as they move forward. Using their services, Forter’s clients can focus on their customer sales and services. It also allows them to ship to countries they previously avoided where fraud was a big risk.
Increased sales to previous high-risk countries
Countries that generate major fraud, such as China, Eastern Europe, and Southeast Asia, have an increasing number of “middle class” buyers, who want western goods shipped directly. Where previously this proved to be very risky, with the Forter guarantee, this risk is now greatly reduced, allowing shipping to those important customers. And the customer base in those countries is increasing, giving many U.S. companies a wider opportunity in sales. Asia alone has millions of potential customers that previously could not order goods direct from the United States or Europe due to the fear of fraud causing countries to prohibit shipping there. “We are creating databases of identity and behaviors, how they behave based on who they are,” said Reitblat. “Different cultures are different in their buying – like holidays, even time of day. What would look fraudulent in Malaysia might be different in China.” Forter is spending more than 20 million U.S. dollars on its research and development to stop fraudsters in their tracks. As Reitblat says, “No retailer can even come close.”
Related articles published in EMV and Smart Payment Cards :
- EMV-enabled cards are taking over worldwide
- Is near field communication the future of data storage?
- Decoding the EMV technology and liabilities
- The use of EMV technology expected to spike in 2017