PYMNTS Intelligence: How eCommerce Marketplaces Can Leverage Digital Identity Protocols to Prevent Fraud
Online retail fraud is a quickly growing problem, with bad actors attempting to steal customers’ data, corporate funds and goods on a daily basis. A recent study found that more than 17% of all global eCommerce transactions during the 2021 holiday shopping season were fraudulent, a 25% increase from the rest of the year. This jump represented a microcosmic example of fraud trends around the world during the past several years, with more online shopping resulting in more entry points for fraud.
Merchants are scrambling to protect themselves and their customers from fraud, not just to avoid stolen data and funds but to preserve customer loyalty and prevent abandonment due to perceived cybersecurity weakness. Many eCommerce marketplaces leverage digital identity protocols such as multifactor authentication (MFA), which has an impressive fraud prevention record but comes with its own drawbacks. This month, PYMNTS Intelligence explores the nature of eCommerce fraud in recent years and how techniques such as MFA have their ups and downs when keeping businesses and customers safe.
How Fraud Affects eTailers
Fraudsters ply a staggering variety of tactics against eCommerce merchants, but the one that seems to worry fraud prevention professionals the most is identity theft. A recent survey found identity theft to be merchants’ most common fraud concern, cited by 71% of respondents. Bad actors committing identity fraud exploit eCommerce websites, stealing customers’ identities, and then leverage those stolen identities to make illicit purchases, often by implanting fake checkout pages that can harvest customers’ email addresses and payment information. When businesses have difficulties in authenticating customers, it can exacerbate this fraud. Half of all eCommerce companies in the U.S. report having trouble authenticating customers on browsers, and 58% struggle to verify mobile users, even when using systems that incorporate artificial intelligence or machine learning.
Digital fraud’s impact is […]
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