Categories: Fraud Prevention

Securing The New Commerce Normal

For all that has changed dramatically in the last several weeks due to the coronavirus pandemic, consumers are still looking for the same two core offerings in every transaction, no matter what it is or where it takes place: seamlessness and security.

An awful lot of other things have changed all around that core, however. Most Main Street businesses are shut down for the time being; workers are away from their offices; and as a result of social distancing, we as a society have concentrated all the activities once spread across a variety of destinations throughout the day into a single place — the home.

And consumer interests are changing too, Kount Senior Executive Gary Sevounts told PYMNTS in a recent conversation. Tracking the shopping trend data since the COVID-19 outbreak began, home electronics sales as well as wellness and health products sales have increased by more than 50 percent; wine sales have exploded by 113 percent.

All that commerce is now digital, which introduces both new opportunities and challenges. The same fraudsters are also still out there, with the same bag of bad tricks, and they’re now operating in an environment full of new areas to attempt to exploit. Making matters even more complex, the world of questionable online commerce has new entrants in the form of the speculators who seek to hoard the home goods consumers need — and then resell them at a ridiculous markup.

“Today, [fraud] becomes a much bigger challenge than before,” Sevounts said. “For a lot of retailers and merchants right now, it’s a fight for survival, and the last thing that they want to be doing is dealing with stolen credit cards and merchandise that results in chargebacks. They don’t want to be shipping scarce items that could benefit real people to scammers that are going to try to resell it. And the challenge is really twofold. First, you want to protect your own commerce, you absolutely want to do that. Second, you want to help your customers who desperately need to rely on getting items.”

The good news, Sevounts said, is that tools for spotting and stopping fraud have greatly improved. While scammers and speculators are proliferating throughout the eCommerce ecosystem, trying to gain from a bad situation, businesses now have the ability to add on layers of defense. And even merchants who are new to digital and are gearing up for their first fight against fraud at scale, he said, can benefit from the foundation that firms like Kount have built in, shutting down fraud of all kinds — at any point in the eCommerce journey.

Spotting And Stopping Speculators

In the early weeks of the COVID-19 pandemic, price-gouging stories quickly became nearly legendary. The $50 rolls of toilet paper, $100 N95 masks, $250 bottles of hand sanitizer and Lysol. A man in Tennessee hoarded nearly 18,000 bottles of hand sanitizer, bottles he later donated after online marketplaces started banning sales of certain types of goods and state investigators showed up at his door.

Since then, Sevounts noted, marketplaces have been attempting to limit price gouging and hoarding behaviors by putting hard caps on how much of particular items customers can purchase at one time. It’s a solid start, he said, but one that needs some technical assistance on the back end if it is actually going to have any kind of effect.

Savvy resellers know how to make more than one email address, he said, and thus will simply hit the same sites under a number of aliases to skirt buying caps. Or at least they will try. One of the advantages of Kount’s 13-year-old Identity Trust Global Network, he said, is that it can take a broad enough view of any transaction data-wise, so that the same customer trying to get around caps by creating multiple accounts will simply stand out.

“Given Kount’s depth and breadth of data, artificial intelligence and machine learning can run through billions of identifiers,” he explained. “That snapshot can very accurately identify unique customers from speculators who keep coming back — which is critical to helping eCommerce providers to implement rules and restrict purchases so they don’t run out of stock and they can actually help their actual customers instead of speculators who want to gouge them.”

And, he added, that kind of layered approach supported by reams of data gathered globally is applicable to all parts of the eCommerce journey, in making sure the sellers are on the level — and in making sure buyers are who they claim to be.

Fighting Fraud On All Fronts

eCommerce merchants, retailers or marketplaces have to deal with the fraud patterns that were already on the rise before the coronavirus crisis and have now gotten a big boost simply by virtue of the fact that there are so many targets.

A rich field of targets isn’t their only advantage. Fraudsters’ tools and artificial intelligence (AI) technology have also improved greatly over the last decade and become very sophisticated at disguising attempts at fraud as something else — a charitable donation, a bank inquiry or a professional audit. And those tactics, he noted, are improving. A decade ago, bad actors were stealing card numbers for digital fraud, and now they’re taking over whole accounts.

Most security tools know to look for cards behaving badly — it’s a new layer and a new competence to back that process up all the way to account creation and log-in to make sure someone isn’t wearing someone else’s account as a digital costume.

“The way to address these things is always through layered defense,” Sevounts said. “You have to really look through the whole digital transaction life cycle because, oftentimes, the fraud starts with account takeover because through massive data breaches that have happened and are still happening now, there are billions of usernames and passwords that are out there on the dark web and in the open market.”

Merchants can defend against this; even those late to the digital commerce party can draft off the tools that are out there and already built. The Identity Trust Global Network, Sevounts noted, is over 13 years old and has reviewed billions of transactions in every imaginable vertical. No matter how new a firm is, he said, Kount likely already knows a lot about the security trends in the space the firm is in.

But, he noted, the clock is ticking — because those who can mount layered defenses against the rising tide of fraudulent behavior of all kinds will soon sweep those not firmly anchored in multi-factor security approaches right out to sea.

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