Over the last decade, online retail, also known as eCommerce, has exploded in popularity and received a considerable boost in the past two years due to the pandemic shutting down brick-and-mortar retailers around the world. Experts estimate that U.S. consumers alone spent more than $933 billion at eTailers in 2021, and this number is only expected to increase as businesses expand online.
However, an increased digital presence means increased digital fraud. Each customer shopping with an online retail merchant represents a potential entry point for a bad actor to steal customers’ or corporates’ data or funds. eTailers are pulling out all the stops to keep this fraud to a minimum, with several digital identity protocols to verify that customers are who they say they are. One of the most effective ways to prevent identity fraud for eCommerce marketplaces is multifactor authentication (MFA), which works by requiring more than one identifying detail when logging in or making a purchase.
This method can be unpopular among companies and consumers, however. Studies have found that many consumers decline this extra step if it is optional or will even patronize a different eTailer if they face too much friction at the checkout. Studies also found that using MFA can prevent more than 99.9% of attacks that rely on stolen credentials. However, the savings involved in preventing data breaches, fraudulent purchases and lost customer loyalty could more than make up for any customer hesitancy. It will be up to each business and consumer if the convenience sacrifice is worth it.
In the latest “Alternative Payments Tracker®,” PYMNTS examines how fraudsters attempt to scam online retail marketplaces and customers and how digital identity systems can help eTailers reduce fraud without introducing frictions into the customer experience.
Two-factor authentication, which consists of users logging into online services with a password and a code sent via SMS, has been proven to be an effective deterrent to fraud. Still, most companies opt out of its use. A recent study found that just 37% of companies require it for their customers, as well as 31% of charities. Its exact usage rate varies by field, with two-thirds of businesses in information and communications mandating it versus just one in five food and hospitality businesses.
Countless businesses shifted some or all of their workforce remote in the past two years to facilitate social distancing during the pandemic, and there have been many lessons learned about what remote work means for corporate cybersecurity. Companies found out that employees remotely accessing office servers offered fraudsters an entry to corporate systems, resulting in several security concerns among corporations. A recent study found that 56% of companies were concerned about data breaches, 57% worried about hacking or intrusions, 54% were concerned with viruses and 50% said they were worried about identity theft.
For more on these and other stories, visit the Tracker’s News & Trends.
At the forefront of fraud prevention are the online retail marketplaces. They need to be to protect the treasure trove of data they host, data that bad actors work tirelessly to get their hands on. Robust digital identity tools are the lynchpin to ensuring that this data is kept safe and secure.
In this month’s Feature Story, PYMNTS talked with Mark Spencer, senior vice president of commercial operations for fast-fashion retailer Jane, about how the company deploys MFA for its cybersecurity.
eCommerce fraud is quickly becoming a growing problem, with bad actors attempting to steal customers’ data, corporate funds and goods daily. eTailers are scrambling to protect themselves and their customers from fraud, leveraging digital identity protocols like MFA to do so.
This month’s PYMNTS Intelligence explores the nature of eCommerce fraud in recent years and how techniques like MFA have their ups and downs when keeping businesses and customers safe.
The “Alternative Payments Tracker®,” a PYMNTS and Socure collaboration, explores the latest in the world of alternative payment method authentication, including the growing popularity of BNPL, the fraud threats facing online retail and how companies are fighting back against fraud via user authentication tools.