What You Can’t See Can Hurt You

What You Can’t See Can Hurt You

Sometimes what you can’t see can hurt you.

What I mean is, even the best looking, most efficiently laid out and appealing websites and mobile apps can create real problems when it comes to protecting online merchants from fraud.

In recent studies we’ve seen that fraud is on the rise. There is rarely a day that goes by without having a news story about another data breach putting consumer data at risk or on the open market for fraudsters to buy, sell and share.

What merchants often leave lacking is what the consumer cannot see and may never know is there, a fraud screening system meant to reduce a merchant risk, loss and liability when it comes to cyber criminals trying to steal from them. Which is just they way it should be. Consumers in general don’t give a lot of thought to what is protecting the retailer, only that they find what want easily, quickly get there order approved and can get back to playing Candy Crush or updating their Facebook status.

However, the worst websites in the world are the ones that leave merchants with mounting losses due to fraud because they don’t understand what it takes to properly protect themselves against today’s highly motivated, very sophisticated fraudster.

Take the mobile revolution, for example. Traffic via mobile has increase many times over the last year or two. Most online retailers have been updating their site or creating apps to allow mobile users to browse, interact and purchase with the device of their choice. But, in the 2015 Mobile Payments & Fraud Survey report, only 17% of merchants had systems that could detect what type of mobile device was transacting with them and a full 43% could not detect what type of device was transacting with them at all.

What difference does it make when it comes to the type of device placing orders on your site or through your app? Well, as it turns out, a lot.

Looking through a sample of more than 100 million mobile transactions over the last 12 months, it is easy to see patterns in which devices are responsible for higher fraud rates and which ones represent the lowest risk. For instance, android phones seem to have more actual fraud associated with them but iPads are subject to more manual reviews, but the fraud rate on them is very low. Why is that? We believe it is easier to conduct fraud on the more available android phones. iPads have a much higher average checkout amount, about $160USD. Higher average sales tend to get more manual reviews. Knowing this may help merchants decide how to react when faced with growing mobile purchases.

The worst websites in the world don’t utilize backend services to stay ahead of the growing fraud threat. They may look fantastic to their customer, or they may simply attract more fraud.