By the end of the decade, $4 in every $1,000 from online payments will be fraudulent, according to a May report from Juniper Research. All told, the value of online fraudulent transactions is expected to reach $25.6 billion by 2020, up from $10.7 billion last year.
But e-commerce marketers’ concerns extend beyond the bottom line.
“Cybercriminals find value in businesses not only from a monetary perspective: They are a rich source of personal information,” said Tamsyn Harris, head of fraud risk security at Australia and New Zealand Banking Group (ANZ).
The Juniper report identified three areas on e-thieves’ radars: e-retail (which will account for 65% of fraud by value in 2020, up from $16.6 billion), banking (27%, or $6.9 billion), and airline ticketing (6%, or $1.5 billion).
This is disconcerting news for marketing heads. Apart from heightened fraud around payment options, marketers also are dealing with the prevalence of ad blocking in the Asia-Pacific region and the threat of ad fraud. In fact, 36% of smartphone users in APAC countries block ads, according to a study by PageFair. China, India, and Indonesia lead the pack in terms of mobile ad-block penetration. Ad fraud also represents a similar, and related, threat to digital ad revenues in APAC.
Payment Fraud On The Rise
Within e-retail, Juniper’s research highlights two key areas for payment fraud: the buy-online/pay-in-store approach, and electronic gift cards. While merchants continue to invest in multilayered fraud protection systems, these often only prevent other types of fraud rather than patching the holes necessary to prevent online card skimming.
Also high on CMO’s list of concerns is fraud surrounding “account takeover.” Most e-commerce stores provide customers with accounts that store personal information, financial data, and purchase history. But perpetrators often hack into these accounts through phishing schemes. In one of the most common tactics, fraudsters send emails to trick customers into revealing usernames and passwords. They then log into customers’ accounts, change the passwords, and make unauthorised purchases.
“Once a business understands what may be of value, they should focus on how to protect it,” Harris told CMO.com. “Cybersecurity can involve simple actions, such as raising awareness internally across all levels of the organisation and having a breach response planned.”
As the Juniper report demonstrates, the amount of fraud perpetrated against businesses is getting worse, both in terms of the number of instances and money lost.
Online buying markets such as Trade Me, Gumtree, and eBay remain in business because members rely on them to ensure they are dealing with like-minded, trustworthy individuals. Yet as Trade Me spokeswoman Logan Mudge reminded us, there are always going to be people looking to do something dodgy online. He also warned that there is no quick fix for protecting a business and its customers from fraudulent activity.
“It takes time, effort, and smarts to stay ahead of the scammers, but without trust and safety you don’t have an online business, so it’s a no-brainer to invest in,” he told CMO.com.