June 21, 2018
New research from the Minneapolis Fed indicates that retailers are more concerned with fraud in their online channels than any other kind of fraud. Across nearly every size business, Fighting Fraud in the E-Commerce Channel: A Merchant Study found that not only was CNP fraud considered their greatest threat, but half worry about their systems’ abilities to handle fraud as the nature of data breaches changes and attacks at the online account level increase. More than three-quarters of those polled expect increased attacks on their e-commerce channels in the next 6 to 12 months.
The study also looked at the strategies merchants use to mitigate fraud and found CVV, AVS and shipping address verification were used by most merchants. More than two-thirds use some kind of email address verification.
“This study provides great insights into what merchants find effective for mitigating card-not-present fraud today and which emerging mitigation technologies they are beginning to use,” said Guy Berg, vice president of the Payments, Standards, and Outreach Group at the Minneapolis Fed. “Retailers could use the information from the report to assess and enhance their current fraud mitigation strategies.”
The report also looked at newer technologies including systems that leverage artificial intelligence and facial or voice recognition. While usage of these systems remains low, merchants who did use them expressed confidence in their effectiveness.