PayPal’s Fraud Chief Says ‘Story-Based’ Analytics Can Fix eCommerce’s Weakest Link

The chain of command in eCommerce is made up of links. And those links go something like this:

A consumer registers with a merchant, places an order and chooses payment; processing goes on in the background and the customer eventually gets what they order. Simple enough in concept — but along the way, Arthi Rajan Makhija , SVP, Head of Global Fraud Risk at PayPal , told Karen Webster, there are numerous avenues for fraudsters to attack. And they generally attack the weakest link in the chain. That weak link, according to Makhija, can be found at the consumer level.

“Whether you are a merchant or a payment processor, you will always have an incredible diversity of consumer base,” she told Webster, warning that every customer interaction is an opportunity for a bad actor to compromise a session or an account and attempt to impersonate a good user.

A Learning Opportunity

“But it’s also an opportunity for us to learn how good customers behave,” she said.

As eCommerce continues to evolve, those customers may be struggling with passwords and keeping devices secure. And no matter what controls and safeguards financial institutions (FIs), merchants and processors put in place, the fraud attack patterns will vary, evolve and shift to take advantage of the path of least resistance.

We’re a long way away from the days when passwords will finally fade away — though there’s been some progress made by Apple and by various “passwordless checkout” initiatives that are out there. But, as Makhija noted, passwords are still the most commonly compromised data sets in the world, paving the way for fraudsters to concoct synthetic IDs.

Add into the mix that there’s at least a level of abuse by customers themselves (through first-party fraud), and the challenge for merchants and FIs is daunting indeed.No surprise, then, […]

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