New Study Reveals True Cost of Mobile Fraud
Posted February 4, 2015
In 2014, Every $100 of Mobile Fraud Cost Merchants $334. In 2013, Every $100 Cost Merchants $283, a Hike of $51 in Just One Year
Do you happen to remember our referencing famous bank robber Willie “the Actor” Sutton who replied when asked why he robbed banks, “Because that’s where the money is.”? Never mind, Sutton never said it (likely it was made up by an enterprising reporter), it’s just common sense and the reason mCommerce has become a high priority target of cybercriminals. That’s where the money is.
A heraldonline.com story reports on LexisNexis Risk Solutions’ annual True Cost of Fraud Mobile Study demonstrating that as more merchants go to mobile, so do cybercriminals. The following has been excerpted from the heraldonline.com article and edited to fit our format.
70 percent spike
Revenue that mobile commerce (mCommerce) merchants lost to fraud spiked 70 percent in 2014 to 1.36 percent compared to 0.80 percent in 2013. For comparison, all merchants lost 0.68 percent of revenue to fraud in 2014 in comparison to 0.51 percent in 2013.
More ways to steal
The complexity of additional payment channels, like digital wallets, coupled with additional access channels, like mobile web sites and apps, produce more avenues for fraud. Study results show that mCommerce merchants accept an average of 4.5 payment channels, significantly more than the 2.6 channels accepted by all merchants. mCommerce companies have more fraud exposure than other types of retailers.
Now is the time for fraud prevention tools
Dennis Becker, Vice President, Corporate Markets, LexisNexis Risk Solutions said, “Mobile commerce is going to be more widely adopted by merchants because customers are clamoring for the convenience. To reduce customer friction and sell more through the mobile channel, now is the time for mCommerce retailers to put in place fraud prevention tools to counter the disproportionate amount of fraud that is currently occurring.”
Authentication, authentication, authentication
“mCommerce merchants have an opportunity to strategically implement mobile-channel specific fraud prevention measures,” Becker explained. “The findings of this study suggest that the more mCommerce companies move away from a ‘one-size-fits-all’ fraud strategy the faster they will grow and be more profitable.”
Based on the study results, customer identity verification is the top fraud prevention challenge for mCommerce merchants, followed by friendly fraud. The inability to confidently verify the identity of a customer and their device leads to friendly fraud, which is defined as fraud perpetrated by a family member or close associate. The study shows that 24 percent of fraudulent transactions are due to friendly fraud. “We expect this percentage to drop, as more mCommerce merchants adopt mobile-channel specific fraud prevention tools,” Becker concluded.