The Clearsale Blog

5 Predictions About the Fraud Prevention Market Landscape

5 Predictions About the Fraud Prevention Market Landscape

With almost a decade working in fraud prevention, I’ve seen plenty of different strategies, buzzwords and solutions come and go, but nothing as dynamic as today’s fraud prevention landscape. Organized fraudsters have gone beyond buying goods with stolen credit card numbers, they are now active in account takeover, fraudulent account creation, online-offline fraud schemes, and exploitation of mobile and even telephone CNP transactions. Based on my experience and the current trends, here are five major issues I see shaping fraud prevention over the next five years.

Domestic orders will carry more risk

As the largest cross-border e-commerce market in the world, the US has always faced fraud coming from beyond its borders in the form of international orders and domestic orders placed with international IP addresses, international credit cards, or freight forwarders that re-ship stolen products overseas for resale. However, up until the 2010’s the US was considered a low-risk country for domestic CNP fraud. Expect that to change.
Over the next five years, the most significant CNP fraud growth in the US will come from domestic orders—US-based fraudsters buying with domestic credit cards, listing US shipping addresses, and exploiting domestic victims. That’s because fraudsters are learning that utilizing data from other countries raises red flags for fraud, but they stand a better chance of slipping through among the higher volume of good domestic orders. They also have plenty of data to exploit, thanks to the ongoing data breach problem and the profusion of consumer credit cards in the US market.

Payments and fraud-prevention will see consolidation

During the late 2010s, the market flooded with new data-driven solution providers in the e-commerce fraud prevention space, attracting headlines and venture capital. Ten of the new fraud-prevention startups have raised more than $200 million dollars combined. I believe the early 2020s will be marked by consolidation as investors seek payoffs for their initial stakes, founders seek rewards for their hard work, and major payments and information players seek the kind of data-driven solutions these startups are developing.

The next wave of consolidation was already in motion in 2017, when MasterCard acquired passive biometrics startup NuData Security to balance fraud detection with customer experience. It continued in January when RELX Group brought digital identity startup ThreatMetrix in order to combine its global Digital Identity Network with RELX’s LexisNexis Risk Solutions. Expect more as existing players seek to build bigger databases to fuel their business decision-making processes.

Machine learning will move beyond the buzzwords

Over the next five years, the market will realize that saying “we have AI algorithms” isn’t enough to set fraud-prevention players apart. In fact, exclusively rules-based systems are already becoming obsolete. The most successful solutions out there already use hybrid approaches that combine the scalability and managerial efficiency of fraud scores with the flexibility and transparency of rules and policies. Moving beyond the AI and algorithm buzzwords, providers will have to prove themselves with back-tests, proofs of concept, and pilots. Fraud solution marketing will require more than slide decks and presentations, as clients come to expect evidence of experience in the market using variables based on relevant data.

Experience will matter (and cost) more than ever

To continue reading please click here.

ClearSale Fraud Protection Buyers Guide 

You may also like

ClearSale Wins Comparably Awards for Best Work-Life Balance and Happiest Employees

ClearSale Wins Comparably Awards for Best Work-Life Balance and Happiest Employees

Fraud protection leader recognized by career site for a second time this year

ClearSale and BigCommerce Prep Ecommerce Small Business

ClearSale and BigCommerce Prep Ecommerce Small Business

ClearSale and BigCommerce have come together to help small businesses address fraud as the holiday shopping season fast approaches. And this year, more than any other year, primarily driven by the..

[Industry Focus] Fraud Risk Profile for Nutraceutical and Drug Retailers

[Industry Focus] Fraud Risk Profile for Nutraceutical and Drug Retailers

As people become more conscious of what they’re putting into their bodies, there’s been an increased demand for high-quality supplements and healthful food and beverages. The result has been a..

3 Ways Tech Can Benefit Remote Teams

3 Ways Tech Can Benefit Remote Teams

Ecommerce businesses are used to an ever-evolving digital connection between them and their customers. But 2020’s COVID-19 pandemic has resulted in that digital connection making its way into the..

Shopping Habits by Gender: What’s Changed in 2020

Shopping Habits by Gender: What’s Changed in 2020

Do men hate shopping online? Are women more worried about fraud?

How Management Should Contribute to Fraud Protection

How Management Should Contribute to Fraud Protection

As companies grow, management often delegates business-critical tasks—marketing, technology, fraud prevention—to different departments. While it might seem to be an efficient way to get things..

Ecommerce Has Seen Holiday-Level Demand Most of The Year. What Will the Holidays Look Like for Merchants?

Ecommerce Has Seen Holiday-Level Demand Most of The Year. What Will the Holidays Look Like for Merchants?

According to Adobe Digital Economy Index report for May 2020, ecommerce spending in May overshadowed the entire 2019 holiday season. Due to pandemic restrictions and health practices that saw..

ClearSale Becomes Shopify Plus Certified App Program Partner

ClearSale Becomes Shopify Plus Certified App Program Partner

The fraud protection leader has been selected as a premier app provider for the highly regarded commerce platform.

“I Don’t Need Fraud Protection — My Business Isn’t at Risk!”

“I Don’t Need Fraud Protection — My Business Isn’t at Risk!”

As an e-commerce merchant, you know the risk of fraud, false declines and chargebacks. But maybe you think it won’t happen to you because you’re a relatively new — or small — e-commerce merchant,..

Want to write
for our blog?

Please review our writers' guidelines
https://www2.clear.sale/press/clearsale-guest-blog-guidelines
and then email guestwriter@clear.sale with your pitch!

Subscribe to our blog