Merchant and e-commerce organizations are no strangers to the struggles of fraud protection. Amazon, a recent target, noted that its merchants were hit by "extensive" fraud over six months in 2018. Hackers stole thousands of dollars from hundreds of merchant accounts by redirecting money to their own bank accounts. In addition, knowing that global digital commerce sales are forecast to skyrocket in 2020 and consumers are increasingly turning to mobile to make purchases and online transitions, businesses must consider the unique fraud threats they face on mobile devices.
Why Mobile Fraud Must Be Treated Differently
Businesses often approach mobile fraud prevention with the same tactics, technology, and mindset they use for traditional desktop e-commerce. The transactions that happen on mobile and the nature of the data captured are quite different than those that happen on desktop, which means merchants should consider a different fraud solution for each channel. For example, mobile orders can be purchased in various ways through a consumer's personal mobile device, website, or app. It is important for businesses to see where the transaction is made in order to identify fraudulent activity correctly.
One way they can do this for mobile is by taking a closer look at the consumer's device ID and geolocation, which provides a unique identifier for each individual, such as the type of phone they use, mobile carrier, and even the default language that's set on the phone. For example, if a consumer has never traveled abroad but has been making purchases internationally, this identifier helps catch fraud in the early stages. While it is possible for fraudsters to spoof a device ID, it is a less-common fraud method.
The Root of an Attack
While fraudsters continue to generate more sophisticated attacks, one of the most common types of mobile fraud is account takeover (ATO). ATO often results when people reuse usernames and passwords across multiple online accounts. If their login information is stolen in a recent breach, that username and password combination is often sold to any number of fraudsters who then test it across the Web until they are given access.
Combating Fraud with Mobile Fraud Prevention Technologies
One of the most targeted victims of mobile fraud are bank customers. A recent report from Javelin found that at least 1.5 million victims of existing account fraud had fake accounts opened by cybercriminals.
While mobile banking makes it easier for customers to access their bank accounts, this also makes them more susceptible to mobile fraud. Mobile banking is an appealing target for fraudsters because of the ease of access to customer information and the speed of electronic wire transfers to an outside bank account. Whether the customer falls for a phishing scam or downloads a malicious app, there are various schemes fraudsters use to infiltrate customer bank accounts. Financial institutions without the proper security measures in place risk putting their customers in the front lines of ATO or identity theft — issues that can be prevented with fraud prevention technologies.
Many financial institutions smartly require customers to go through multifactor authentication (MFA) in order to access their bank accounts. MFA reduces the chances of mobile fraud by putting multiple authentication and verification methods in place that require customers to approve every transaction made. This may include asking the customer for additional verification methods such as inputting their PIN, SMS text verification, answering security questions, or using biometric authentication, such as their fingerprints.
Other fraud prevention solutions include machine learning and artificial intelligence that predict the user's actions as well as behavioral biometrics that identifies how users behave with their mobile devices. These technologies help businesses identify and prevent fraudulent threats from occurring before it happens.
Whether you manage a mobile commerce platform or a financial institution, acknowledging that mobile security requires a unique solution is the first step toward identifying and preventing mobile fraud threats. And implementing the right fraud prevention technologies ensures that your business and customers are out of harm's way.