Fraud Prevention

Securing The Growing Digital Opportunity

digital commerce

People have been talking about the world “going digital” for the last decade, and anticipating the arrival of a digital-first world. But even the most enthusiastic futurist or technologist couldn’t have forecast that by the first week of May 2020 the world would no longer be going digital so much as gone digital in response to black swan events that radically hit reset on our working, commerce and personal lives nearly overnight.

In a post COVID-19 world where everyone is more or less sticking close to home unless absolutely required by necessity to go out, Gary Sevounts, executive at Kount, told PYMNTS in a recent conversation, consumers and businesses alike have nearly entirely reoriented themselves around digital. Three months ago, he noted, any talk about streaming probably meant music or movies; today it could also be referring to piano lessons, class instruction, meetings with co-workers, virtual cocktail hours with friends or a daily workout session.

And where consumers go, businesses are following — including companies that have never (or barely) transacted online before, and those that have but never at the scale they are currently being called to provide.

All of which, Sevounts told PYMNTS, combines to create an environment that fraudsters live to take advantage of — one rich with inexperienced targets they can try to exploit and filled with uncertainty and change they can attempt to hide in. Attempt, he noted, but not necessarily succeed.

“The thing we are learning is the importance of data so that we can draw from that set to identify the difference between what is good and what is bad,” he explained. “It’s also very important to have artificial intelligence that relies on not just supervised models, but also unsupervised machine learning that can quickly identify what’s known about behavior and compare it against new patterns that are emerging.”

Fraudsters, he noted, are evolving in real time, which means the tools to fight them back have to be able to evolve just as fast, if not faster.

Capturing The New Opportunity While Mitigating The Risk 

Consumers over the last several years, Sevounts said, have gotten trained to expect digital commerce in a certain way — they order something one day, and they have it in their hands two days later, at the very latest. Asking someone to wait a week, he said, under normal circumstances makes people irritated, and under current circumstances may leave them enraged because they are housebound with fewer commerce options and not much left in the way of patience. And that actually creates a massive opportunity for retailers of all kinds to jump into the digital market, he said, and grab some market share away from giants like Amazon that have been hit by an onslaught of orders. Amazon has suffered both stock outages and extreme delivery delays in the last several weeks, and a lot of local brick-and-mortar players are “seeing for the first time an opportunity to gain competitive advantage,” he said.

“So if you are an electronics chain … or a pet store, or a liquor store — you can now pivot to buy online and do curbside pickup, right? Retailers, merchants are realizing they can actively utilize those channels because for a lot of them it’s survival. But we are seeing in our data it’s also  growth,” he said.

Building that experience properly, he noted, means allowing consumers to create accounts with stored credentials and data — because to build a competitive digital service means building one that works smoothly, not one that consumers have to continually relog into. And that, he said, is a target for fraudsters, as players in eCommerce, gaming and streaming have learned the hard way in the last several weeks as their account takeover figures have risen alongside their spiking signup numbers.

And not only are there more fraud attempts, Sevounts added, but the pressure on anyone pushing hard into digital isn’t just to push back the fraudsters, but to do so in a way that isn’t simply locking down the site and bouncing good transactions, and to do all of that basically within a fraction of a second.

“Because if I ordered something and I wanted it in the next hour, the company doesn’t have two days to evaluate if I’m good or bad. And if I’m a good customer and they decline my transaction, that could be a lifetime insult,” he said.

And an avoidable insult — as technology from Kount and others can help businesses see a customer more clearly.

Developing For What’s Next

Kount’s strategy, Sevounts explained, is based around depth and breadth of data pulled from thousands of points. And email address, device data, behavioral data — all of these things are important, but security efforts that build primarily from one data stream always run the risk of that stream being compromised and rendering their efforts moot. Over 12 years and thousands of global partnerships, Kount has developed artificial intelligence (AI) that has gotten very good at looking at a myriad of data points very fast, and determining the person is who they say they are, or at least within a very high probability. It is easy to beat any one identity marker, Sevounts noted, but it is hard to beat a thousand at once.

This holistic approach to the market is becoming increasingly pressing and important, because digital has branched out more broadly and quickly than anyone was forecasting at the beginning of the year — and while all of the switchover will not be permanent, a fair amount of it might be.

“More companies are going to rely on digital channels like streaming, right? More gyms are going to say, ‘Hey, people may not want to come to gyms because they are apprehensive but we have great instructors and new tech so this can be an opportunity to do both,’” Sevounts said.

But to make that opportunity real, it has to be reliably secure and able to move at the pace of a rapidly speeding up marketplace.

——————————

NEW PYMNTS DATA: HOW WE SHOP – SEPTEMBER 2020 

The How We Shop Report, a PYMNTS collaboration with PayPal, aims to understand how consumers of all ages and incomes are shifting to shopping and paying online in the midst of the COVID-19 pandemic. Our research builds on a series of studies conducted since March, surveying more than 16,000 consumers on how their shopping habits and payments preferences are changing as the crisis continues. This report focuses on our latest survey of 2,163 respondents and examines how their increased appetite for online commerce and digital touchless methods, such as QR codes, contactless cards and digital wallets, is poised to shape the post-pandemic economy.

TRENDING RIGHT NOW