The Price of Mobile Payments Fraud

In 2015, online and mobile fraud reached $10.7 billion total. That’s the word from Juniper Research, and that same word suggests that the problem is only going to get worse. In the next two and a half years, that level is expected to hit $25.6 billion. So what can you do to protect yourself from that kind of rampantly-growing fraud? The good news is, more than you think.

There are three basic kinds of mobile fraud to be concerned about for most business: identity theft, loyalty fraud, and friendly fraud. Identity theft is the big one, and 71 percent of merchants consider this the leading cause of fraud to consider. Identity theft ranges from the theft of mobile devices in a bid to make use of the mobile wallet systems therein to the use of intercepted data to make purchases online.

Loyalty fraud, meanwhile, is the fraudulent appropriation of loyalty program access. The points involved are either sold off outright, or otherwise transferred to other users. Friendly fraud is perhaps the strangest of all, where legitimate orders are disputed and merchants required to make refunds accordingly. Sometimes this is even unintentional, done when customers forget an order was placed and disputing it.

That’s a lot to keep in mind, but thankfully, protection measures are fairly simple. Start by distinguishing between e-commerce and m-commerce; the two have different protection methods unique to their own operations. Follow that up by setting up Payment Card Industry (PCI) Data Security Standard (DSS) Level 1 security, which is the most robust of protection measures. Then look into multi-factor authentication as a means to provide extra protection to the customer directly, or consider biometric support as a simpler but strong alternative. Finally, bring in the customer themselves; track behavior, and consider getting further approval for purchases that are out of the ordinary and may signal fraud.

With some comparatively simple measures, businesses can better protect customers against fraud, and thus improve the customer experience and bring users back for more shopping later. Leaving aside issues of liability and the like, that’s the biggest reason to put such security in place. Protecting your customers today means protecting your income tomorrow.