ChowNow: AI Helps Independent Restaurants Fight The Growing Threat of Digital Fraud

More than 100,000 eateries — or about one in six restaurants nationwide — have closed due to the pandemic, according to National Restaurant Association estimates. The industry as a whole lost $165 billion in revenue between March and July, and it is on track to lose $240 billion by 2021 — with the decline expected to continue until the pandemic abates.

Mobile ordering apps are largely responsible for keeping the industry above water, but fraud still plagues the sector. And while promising news regarding COVID-19 vaccines may have put the end of the pandemic in sight, the restaurant industry’s growing fraud concerns will not cease as abruptly.

The December Mobile Order-Ahead Tracker® explores the latest digital ordering developments, including how restaurants can apply the lessons they have learned in 2020 to the post-pandemic world, the tools and technologies used to fight fraud, and fraudsters’ latest schemes to make off with customers’ cash, rewards points and valuable personal data.

Developments From The Mobile Order-Ahead World

Social media fraud has been on the rise during the past year. Such schemes entail fraudsters falsely advertising offers from restaurants on social media, then duping victims into paying for them and absconding with the funds. More than $134 million was lost to such scams in 2019, according to the Federal Trade Commission (FTC), while $117 million was lost to them during the first half of 2020 alone. Victims reported that Facebook and Instagram were the most common avenues for these schemes.

Botnets are another tool in fraudsters’ arsenals, allowing bad actors to quickly flood quick-service restaurants’ (QSRs’) defense mechanisms with fake accounts or other scams. Fraud prevention developer Kount, however, is working to thwart these attacks with new bot detection solution that uses a customizable, rules-based detection system to differentiate between bad and good bots. More than 80 percent of eCommerce businesses have reported monetary losses from malicious bot networks within the past year, with two-thirds of these firms suffering losses of $500,000 or more.

Mobile ordering systems are one of the few tools keeping restaurants afloat as the pandemic wears on. A study found that restaurant revenues declined by 9 percent year over year in October, largely due to decreased in-restaurant traffic due to social distancing regulations. Experts say that mobile ordering has been critical to keeping this decline from becoming a nosedive, helping to prevent a 62 percent decline in dine-in revenues.

For more on these and other mobile order-ahead news items, download this month’s Tracker.

ChowNow’s Fraud-Fighting Lessons Amid The Pandemic

The pandemic has devastated the restaurant industry this year, with big chains and independent eateries alike facing lockdowns as well as surges in digital fraud. There are a number of lessons that restaurants can learn from their experiences during this challenging time, however.

In this month’s Feature Story, Eric Jaffe, co-founder and chief operating officer of ChowNow, explains how independent restaurants can improve their security capabilities and protect their bottom lines by avoiding hefty commission fees.

Deep Dive: How The Trends Of 2020 Can Inform The Coming Decade’s Fraud-Fighting Goals

The past year has brought about many challenges in the restaurant industry, including economic downturns, declines in restaurant traffic and upticks in fraud. Some of the many criminal activities that are on the rise include chargeback fraud, fake reviews and “pizza plug” schemes that harness stolen credit cards, but the tactics that restaurants have developed to stave off these schemes could serve them well into the future.

This month’s Deep Dive explores the fraud trends that are shaping the restaurant industry during the pandemic and the fraud-fighting technologies QSRs are developing to keep them in check.

About The Tracker®

The monthly Mobile Order-Ahead Tracker®, a Kount collaboration, offers coverage of the most recent news and trends and a provider directory highlighting key players across the mobile order-ahead ecosystem.