News, Education and Events Decoding Digital Payments & Fraud

News, Education and Events Decoding Digital Payments & Fraud

E-Commerce Fraud, False Positives Surging: Report

E-Commerce Fraud, False Positives Surging: Report

Nearly three-quarters of business executives are more concerned about online fraud now than they were 12 months ago, according to a new report. Experian’s 2018 Global Fraud and Identity Report lays out the challenges merchants are facing (as well as the mixed messages they are receiving from consumers) that make e- and m-commerce unique, even as they are expected to meet consumers on the terms they demand.

According to the report, online fraud prevention has generally focused on detection at the transaction level. This emphasis on permission rather than trust has resulted in the growing problem of false positives (when fraud detection systems are too restrictive and flag legitimate transactions as suspected fraud). Experian found that 71% of companies know they are denying more transactions than they should. At the same time, 63 percent of businesses have experienced the same or more fraud losses in 2017 as they did in 2016. The result in many of those cases? The screws will be tightened and more false positives generated.

Another apparent paradox is that, while cart abandonment remains high and merchants do all they can to streamline the user experience, Experian found that a lack of visible security measures—which introduce friction—was the number one reason consumers abandoned transactions. At the same time, 35 percent said they would transact more online if there were fewer security hurdles. And, consumers in different countries have different tolerances for friction caused by security.

According to David Britton, vice president of industry solutions for global fraud and ID at Experian, an increased focus on identity could help alleviate these and other challenges.

“The ability to recognize an individual is becoming key,” said Britton. “It establishes trust between the business and a consumer so the business is able to recognize and believe that the person they are interacting with is the consumer they claim to be. If you can recognize an individual more accurately, you have a safer bi-directional transaction.”

Like many fraud professionals are acknowledging, Britton said a creative, layered technology that includes physical biometrics, behavioral biometrics and transactional history can provide a comprehensive view of a consumer.

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