As part of my role, I get the opportunity to travel around the world. Its great to see new cities and taste local foods. However, at heart, I am a fraud fighter. So what I love about traveling is observing fraud trends in each country.
Its fascinating to see what trends are similar and different from one country to another and sharing best practices. Therefore, I would like to share some trends Ive observed within some wider regions.
Fraud in Latin America
Merchants in this market are in an exciting position right now, with great opportunity to expand their online presence. Historically, these merchants havent been keen on selling online. However, the increasingly global aspect of online commerce has led to customer expectations being more aligned with trends in other markets. Specifically, merchants are looking to pick up and mirror trends theyve observed in the US market.
However, protecting that online presence is proving to be a challenge. For one, access to external consumer data is not as easy as it is in other markets. In Mexico, for example, there are few bureaus or third-party companies to provide that kind of information.
Another observation is that a high percentage of online transactions are declined. This is due to both the high rate of automatic declines for cross-border payments and high fraud rates overall in the region. High fraud typically means strong fraud controls, and strong fraud controls can result in a lot of false positives in terms of decline. As an example, I talked to a large ticketing company that has a steep decline rate from failing their verification standards, pushing their customers to buy at a kiosk. In my view, this could lead to poor customer experience, as losing the opportunity to secure a ticket to an important event would not only cause a one-time loss but the loss of the lifetime value of that customer.
European Union & the United Kingdom
This is a market where we saw an earlier adoption of EMV via chip and pin along with 3D Secure authentication, the second of which can impact conversion rates of online sales. As a personal example, when I go to the UK and try to buy online, passing 3D authentication is always a challenge for me since I dont live there.The global advent of 3D Secure 2.0. and Strong Customer Authentication in the EU will stop online merchants from paying for most card fraud. Card issuers will be challenged to authenticate their clients using new transaction data to that they previously didn’t have access to.
Ever more demanding consumers will seek the minimum impediments to purchase online. Security will become a competitive area: if another card company can avoid asking for further confirmation of identity, buyers will opt to choose that card. Card issuers are faced with a challenge—how will they balance customer friction and fraud prevention? The businesses which have better fraud risk analytics and better data on which to make decisions will succeed. Merchants have already discovered that email address is an effective fraud risk factor in ecommerce; it is now time for the financial services industry to learn something from them.
Asia Pacific
Fraud in the APAC region is very diverse in terms of threat profiles and shows no signs of slowing down. One commonality observed across our customers in the region is an influx of synthetic ID attacks, where stolen customer information is used to transact. These attacks are launched at scale by organized fraud rings, so attacks of this nature aren’t limited to a certain type of company. The threat is equally present from ecommerce merchants to financial companies.
Understandably, merchants in the Asia Pacific region – like their counterparts all around the world – have many priorities when it comes to optimizing day-to-day operations. Especially for growing companies, preventing fraud is not always at the top of the list. This mentality leads to a reliance on sub-standard fraud prevention mechanisms, heavy on manual effort to face today’s sophisticated and automated fraud threats.
The time needed to manually analyze customers and verify orders means many businesses are unable to devote their attention to other aspects of their operations, thus impeding growth. Most importantly of all though, failure to balance the fraud prevention equation can undermine reputation nationally and globally. If consumers can’t trust a business to keep their hard-earned cash safe, they will shop elsewhere.
In conclusion
Each market has its unique headwinds to counter. With this in mind, we have designed our product at Emailage from the ground to be a global, enterprise solution, a single integration that can be can be leveraged everywhere.
No matter the region, fraudsters are bolder than ever. We must use all the tools at our disposal to fight back.
Throughout all the countries I visited, the common denominator is that the email address is compelling when it comes to assessing risk and verifying consumer identity. Especially in areas where its not very easy to collect any PII or those without credit reporting bureaus, we are still able to provide robust results without friction on the customer side. After nearly 20 years working in fraud prevention, I still believe the email address to be the best global identifier that allows companies to perform robust risk assessment and confirm identity, even in the absence of other data elements.
Even if all other information is legit, its nearly impossible to mimic the email address. Not to mention, your email is 100% unique. Thats why we refer to the email address as a unique, global identifier. People have tried different forms of data for years, like social security numbers or device IDs, but none of them are unique. None of them have globally recognized syntax and a lot of time to be easily hacked or stolen.
About Amador Testa
Amador is Chief Product Officer at Emailage. He is an industry expert in online fraud, identity theft and cybercrime. Before Emailage, he was the head of fraud for card acquisitions at American Express and later led global fraud prevention divisions at Citigroup. Amador enjoys playing tennis, running marathons and traveling with his family.
About Emailage
Emailage, founded in 2012 and with offices across the globe, is a leader in helping companies significantly reduce online fraud. Through key partnerships, proprietary data, and machine-learning technology, Emailage builds a multi-dimensional profile associated with a customer’s email address and renders a predictive risk score. Customers realize significant savings from identifying and stopping fraudulent transactions.
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