The booming ecommerce sector is on a high-growth path with no slowdowns in sight any time soon. If estimates are anything to go by, the ecommerce sector may reach USD 8.1 trillion by 2026.
Low barriers to entry, multiple digital payment options, easiness of use, and the ability to make device-agnostic purchases are driving the prolific growth of ecommerce platforms around the world. A growing global customer base is also driving cross-border ecommerce, as consumers look for better deals and businesses try to expand their operations across diverse geographical locations. The global B2C cross-border ecommerce is expected to clock USD 5,576.73 billion in revenues by 2030.
Unfortunately, the reasons behind this prolific growth are also the reasons that make the ecommerce sector – both domestic and cross-border – susceptible to fraud.
As new ecommerce players emerge and compete among themselves to acquire customers, they are trading off verification for improved user experience, allowing users to register with little or no information. They are also introducing new sales channels and digital payment methods to facilitate online shopping for their consumers. However, fraudsters exploit these conveniences for new account fraud, account takeover, payment fraud, and a host of other criminal activities.
Fraudsters can use these fake and compromised accounts to impersonate sellers and post ads of non-existent items to dupe users into paying for goods that would never get delivered. Posing as buyers, they can use stolen credit card details to make purchases or hoard inventories. They may tarnish the image of genuine buyers by manipulating the reviews and ratings of their products through fake negative reviews and lower product ratings. Even worse, they can launch phishing campaigns to trick users into sharing their personal and financial details.
The problems for ecommerce platforms can snowball into a disaster if these fraudsters are left unchecked. Not only do ecommerce platforms run the risk of financial losses due to fraudulent activities, but they also disrupt user journeys and cause consumer resentment.
Unhappy users may choose to avail of a competitor’s platform leading to loss of revenue and brand reputation to the affected platform. Therefore, ecommerce players need to build trustworthy platforms where both buyers and sellers can transact in a safe and secure digital environment.
Trust is the cornerstone of an ecommerce platform, especially because neither the sellers nor the buyers know each other. They trust the ecommerce provider for providing them with a safe and secure platform for transactions. It is, therefore, the responsibility of the ecommerce players to ensure secure transactions through robust user verification methods that allow balancing fraud prevention with a superior user experience.
Ecommerce is the brightest star of the digital economy, which is abuzz with activity 24/7. Ecommerce players cannot allow fraudsters to exploit this global ecosystem for monetary gains or consumer abuse. They need to step up their fight against fraudsters with robust fraud prevention solutions that help identify fraudsters from authentic users. For this, they need verification mechanisms that not only address the authentication challenges but also help maintain the user experience that consumers globally expect.
Ecommerce platforms often verify their users based on the documents and proofs that users submit. Fraudsters can use stolen information or create fake documents to pass these verifications. Therefore, it is essential that ecommerce platforms ascertain the authenticity of the information and the documents by checking them on several parameters before allowing the user to proceed any further.
However, in a digital-first economy, manual review is not a sustainable solution, as modern digital businesses must approve or reject user requests in near real-time. Consumers expect their requests to be processed instantly, whereas manual reviews take time to process as they involve massive human effort. Further, manual reviews are prone to human errors and bias.
Ecommerce platforms need automated verification solutions that leverage the power of the latest technologies – such as optical character recognition, artificial intelligence, machine learning, facial authentication, behavioural biometrics, proof-of-life, liveness, and MFA – combined with a touch of human expertise. This combination of technology with a hint of the human element can enable them to accurately detect and stop fraudsters early in their attacks, while also preserving an excellent user experience.
Collaboration and sharing intelligence can become crucial weapons in the fight against fraud. Each member can benefit from the insights on new fraud tactics detected anywhere in the network and prepare in advance to fight off evolving threats. Ecommerce players that leverage threat intelligence to take proactive fraud prevention measures stand to gain an edge in this fiercely competitive market.
This editorial is part of The Paypers' Fraud Prevention in Ecommerce Report 2022-2023, the ultimate source of knowledge that delves into the world of fraud prevention, revealing the most effective security methods for companies to stay one step away from bad actors and secure their businesses.
Darryl Green, Executive Chairman of CAF, is an experienced entrepreneur in the global identity and fraud prevention market. He was a Co-Founder at Ethoca and helped build and establish the company as an industry leader in collaborative fraud loss prevention.
CAF is a leading provider of end-to-end identity verification, proofing, and authentication solutions, that combine advanced computer vision ML models, an AI-powered decisions engine, and sophisticated identity orchestration with an extensive collection of biometrics and identity databases.
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