Online fraud attempts jump

Online fraud attempts jump, especially for criminals using mobile devices

Fraud prevention software provider Kount says retailers need to have their guard up on desktop and mobile devices.

Online fraud attempts are going nowhere but up, and retailers need to have their guard up at all times, a fraud expert says.

“The number and sophistication of the organized criminals that have constructed a criminal enterprise to separate the good guys from their money is a big deal,” says Rich Stuppy, chief operating officer for fraud prevention software provider Kount. “These guys are very sophisticated and are using, in some instances, more technologies than retailers are using to commit online fraud. All of that has led to an increase in the number of fraud attempts. In some verticals it’s three times; in other verticals it’s five times over eighteen months ago.”

Fraud has jumped dramatically in such categories as gift cards and online ticketing, while also increasing in online sales of electronics and health supplements, Kount says.

Sharp growth in mobile commerce is helping to fuel an increase in mobile fraud.

Data from comScore Inc. shows sales on mobile devices grew 58.5% year over year during the 2015 holiday season, presenting more opportunities for retailers to reach consumers and capture a greater share of the market. However, the shift to mobile also represents an opportunity for another group—criminals.

“The way mobile is changing the way people interact with businesses is a gigantic deal,” Stuppy says. “As retailers have rushed into mobile, they haven’t realized there’s a different set of fraud rules there.”

The rules are different because it’s harder to track fraud attempts on mobile devices than on desktop computers.

Mobile carriers assign IP addresses based on where a mobile device was purchased, not on its current location, making it harder for retailers to assess fraud risk of users connecting to sites from mobile devices. Though mobile devices present new opportunities for criminals and a new potential headaches for retailers, Stuppy says Kount’s data shows criminals haven’t yet shifted their focus to mobile.

“Fraudsters haven’t needed to shift to the mobile area because fraud is easy enough in the traditional space,” he says. But criminals will adapt and retailers must be prepared.

“If you get a comprehensive fraud control system in place, you can use it as a competitive advantage to enable your business strategy, to confidently go into new markets, take higher risk promotional activity and really use a comprehensive fraud strategy as a business enabler,” Stuppy says.