The Clearsale Blog

Online Fraud Management Trends We’ll See in 2017

Online Fraud Management Trends We’ll See in 2017

With cyberattacks on the rise and the cost of fraud skyrocketing, merchants of all sizes are in for a bumpy ride for the next several years. But the way fraud takes place is changing, in ways that might surprise you. Here’s what you need to know about the fraud that happened in 2016, and here’s what you should do about it in 2017.

4 Ways Fraud Might Evolve Next Year

A new study by Javelin identifies some disturbing new developments in online credit card fraud over the past year:

  1. The number of fraud victims is growing, even though the dollar amount stolen has decreased. Fraudsters are smart, and they’re increasingly committing fraud via smaller transactions that are more likely to escape unnoticed by the merchant until it’s too late. The payoff for each stolen cache may be less, but the chances of success for the thief are much higher.
  2. As EMV becomes more common in the United States, new account fraud is on the rise. The more stringent point-of-sale security with EMV cards means that criminals are less likely to get away with using stolen or fabricated cards. So they’re shifting their attention to new account fraud, for example, using stolen consumer identities to illegally open new credit card accounts.
  3. Consumers simply don’t trust financial services institutions. As a result, they’re less likely to use the fraud protection services offered to them, like email alerts or transaction monitoring. This means that when a consumer’s identity has been stolen, it may take longer to detect, which increases the amount of damage the thief can do.
  4. S. consumer information is increasingly being used for overseas fraud. Fortunately, card issuers are detecting 69% of these cases. Unfortunately, that still leaves 31% of global fraud going undetected. And although consumers are typically protected by card issuers when these fraudulent transactions are made, merchants are left to bear the cost of the stolen merchandise, lost shipping and handling expenses, plus chargeback fees.

The best way to combat these trends is by staying on top of and implementing current fraud management solutions. Here’s what we see in store for the industry.

Top Fraud Management Predictions for 2017

It’s clear that as soon as new fraud technology evolves, so do cybercriminals. Nonetheless, there are several strategies you can employ to remain one step ahead of them.

More merchants will focus security efforts on mobile shopping apps

Everything in 2017 will be mobile. Google is transitioning to a new ranking algorithm that heavily weighs mobile-friendliness as a major factor. Mobile commerce is skyrocketing and is predicted to account for half of all e-commerce sales by 2017. And fraudsters are picking up on the trend.

A major challenge for merchants here – and opportunity for thieves – is that as fast as retailers are churning out new shopping apps, they aren’t always thinking through the fraud management components of the app.

  • E-Retailer Tip: Fraud solutions such as IP geolocation, real-time transaction tracking and customer profile databases are readily available and can dramatically improve your ability to verify mobile purchases.

Fraud prevention networks will grow in popularity

There’s a tendency among merchants to be highly protective of their data. It’s understandable. And yet, data may be the key to spotting fraud. Cybercriminals are sneaky, and they know just how to fly under the radar of the most typical fraud prevention measures. But when you look across lots and lots of transaction data, a bigger picture emerges – and fraudulent trends become apparent.

This means that it’s in merchants’ best interests to get over themselves and start sharing their data. One of the best ways to do this in a structured way is to join a fraud prevention network.

These networks are designed specifically to watch for attacks and warn member businesses. Alone, merchants simply can’t see the big picture. Together, there is power in numbers – the power to identify trends in a much more cost-effective way than going it alone can ever match.

  • E-Retailer Tip: Networks should never seek to share confidential consumer information, such as credit card details.

Human analysis will increasingly support and complement artificial intelligence

Artificial intelligence – also called advanced machine learning – is everywhere these days. It’s one of the top 10 strategic technology trends in 2016 according to Gartner, and few areas have leveraged it as fully as the fraud management industry. It’s a fast, cost-effective solution that smartly takes advantage of algorithms and big data.

And yet, artificial intelligence on its own is still limited.

A major problem with automated fraud screening solutions is that they invariably lead to legitimate transactions being falsely declined, which benefits no one.

Integrating human intervention with automated systems can reduce the number of these falsely declined transactions. Moreover, as human analysis leads to more accurate fraud decisions, adding those analytics back into the automated tools is where the true “machine learning” takes place – making the entire system smarter and more accurate.

  • E-Retailer Tip: Target your hybrid human-AI solutions to your product space, customer demographics, and geographic markets. For example, an IT-goods retailer and a jewelry retailer will need very different fraud strategies.

Leveraging Predictions to Create Fraud Management Goals

No company wants to headline the next security breach. Stay one step ahead of fraudsters by being aware of the latest fraud management solutions. New types of fraud are emerging every day; you must be aware of them in order to protect your business and your customers.

While fraud management solutions are very much a science, they’re also an art. Want to learn more about how we’ve combined the two approaches into a robust, comprehensive strategy that offers total guaranteed protection? Contact one of our fraud protection analysts today.

New Call-to-action

You may also like

ClearSale Recognized with 2021 Comparably Award for Best Company Outlook

ClearSale Recognized with 2021 Comparably Award for Best Company Outlook

Fraud protection leader ranked among businesses for high employee confidence and successful outlook

Mobile Application and Microtransaction Fraud: What It Is, How to Prevent It

Mobile Application and Microtransaction Fraud: What It Is, How to Prevent It

The exponential growth in digital commerce has made it easier and more convenient than ever for consumers to engage with brands.

One way they’re doing this is through mobile applications. While..

Critical Pandemic Lessons in Mobile Payment Fraud Prevention

Critical Pandemic Lessons in Mobile Payment Fraud Prevention

As the world pivoted to online shopping, work, and learning last year, the timeline for mobile usage growth jumped ahead by two to three years in the first half of 2020. Many retailers rolled out..

QR Code Payments Are Convenient, Great for Distancing, and Targets for Fraud

QR Code Payments Are Convenient, Great for Distancing, and Targets for Fraud

QR code payments have finally caught on in the U.S. after lagging behind adoption in China and other Asian markets. Why the change? The need for contactless payments brought on by the pandemic..

ClearSale Nominated for “Best Business Process Outsourcing” in the NORA Awards

ClearSale Nominated for “Best Business Process Outsourcing” in the NORA Awards

Retail association recognizes ClearSale’s valuable fraud protection services for businesses worldwide.

Advance Strategies to Eliminate Ecommerce Chargebacks

Advance Strategies to Eliminate Ecommerce Chargebacks

What can we expect e-commerce to look like throughout 2021? There's still a lot of uncertainty in the economy, but some strong trends emerged last year that merchants can build upon now as..

Not-For-Profits and Charities Are High-Risk Targets for Costly BIN-Bashing Fraud. Here’s What to Do About It

Not-For-Profits and Charities Are High-Risk Targets for Costly BIN-Bashing Fraud. Here’s What to Do About It

By Ralph Kooi, Australia Country Manager, ClearSale and Matt Humphries, Head of Sales and Marketing, Bambora

As UK Stores Target a Global Audience, Here’s What You Need to Know About Security

As UK Stores Target a Global Audience, Here’s What You Need to Know About Security

The sharp rise of eCommerce has eliminated shopping borders and it's not unusual for hackers to target stores not in their local country to avoid outing themselves.

What You Need to Know in Ecommerce

What You Need to Know in Ecommerce

The past year or so has changed how we shop and how we think. As the world changes and as consumer behaviour changes with it, as merchants we must start to ask ourselves, very seriously, will our..

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