Report: Donatos Pizza Bakes In Digital ID Tools To Prevent Food Fraud

Takeout and delivery remain part of consumers’ dining habits one year after the start of the pandemic, with these trends showing no sign of slowing down. One recent study found a 36 percent jump year-over-year in the number of customers who tried a restaurant’s branded mobile app for the first time in 2020, for example. Consumers are also engaging with eateries’ loyalty programs in higher numbers as well as ordering out more frequently. One recent PYMNTS study found 42 percent of bridge millennials, those between 33 and 42 years old, count as “restaurant enthusiasts,” making orders for takeout or delivery at least twice a week.

This expansion of engagement with restaurants — especially via mobile order-ahead apps — is also prompting more interest among fraudsters, unfortunately, who are zeroing in on eateries and these apps with more fervor. Mobile and digital identity theft have soared in recent months, with one study finding 47 percent of United States consumers reported experiencing identity theft between 2019 and 2020, for example. This makes having robust digital identification measures in place on one’s mobile apps essential for quick-service restaurants (QSRs).

In the March Mobile Order-Ahead Tracker®, PYMNTS examines how consumers’ mobile ordering and payments behaviors has shifted one year since the start of the pandemic, as well as how this has caused an increase in fraud schemes and attacks. It also explores how QSRs can craft secure, seamless ordering experiences on their apps by placing digital identity at the forefront of their fraud protection strategies.

Around The Mobile Order-Ahead World

Fraudsters are attempting numerous scams on mobile order-ahead apps as they grow more popular among diners, including mobile delivery fraud schemes that can have lasting financial consequences for targeted eateries. Fraudsters will make food orders via mobile apps, only for the restaurants to then receive requests for refunds afterward, claiming either the food did not arrive or that the requests were made with stolen cards then used illegitimately. This leaves the eatery to take the loss associated with that refunded order. This type of fraud can be especially difficult for restaurants to ward against as legitimate customers also request these types of refunds, which leaves QSRs searching for new tools and technologies that can help to distinguish between fraudsters and diners.

Schemes of this type can also economically impact the couriers delivering the food ordered through these mobile apps. Delivery service Postmates is seeing a surge in the number of gig workers on its platform, reporting they had been targeted by bad actors, for example. Fraudsters will make low-value orders, such as placing one for a single cookie, before calling the courier assigned to deliver that order. They will then impersonate the Postmates’ app on the call and inform the worker the order was flagged, before asking for the courier’s account and Postmates login information. The fraudsters will then strip the associated accounts of their funds, something that can have severe financial consequences for these gig workers. For example, one courier reported losing $300 — his entire earnings for the week — after becoming the victim of this scheme.

Supporting mobile apps can also provide eateries with key benefits even in the face of growing fraud, providing consumers with more convenient ordering and more opportunities to interact with the restaurant’s brand. Consumers also still appear to be ready and willing to make use of such apps when available, as restaurants are continuing to discover. Drive-thru coffee chain Dutch Bros Coffee recently launched a mobile app for its customers on Feb. 1, seeing approximately 1 million users by Feb. 24, for example. The app allows consumers to connect with the coffee chain’s loyalty program as well as make and pay for orders. Dutch Bros has also announced plans to build on the app’s initial successes throughout the rest of the year as consumers become more engaged on the platform.

For more on these and other stories, visit the Tracker’s News & Trends.

How The Pandemic Is Changing The Implications Of Digital Identity Verification For Mobile-Focused QSRs

More consumers than ever are using mobile apps to order takeout and delivery in the wake of the ongoing global health crisis, leaving QSRs to stay on top of a flood of virtual orders. Doing so successfully means being able to weed out the increasing number of fraudsters coming to target these platforms as well. These bad actors use stolen credentials to mimic legitimate customers placing orders on restaurants’ third-party or branded apps, making robust digital identification measures crucial, explained Matthew Coy, vice president of information technology for fast-casual pizza chain Donatos Pizza in a recent PYMNTS interview.

To learn more about how the pandemic is affecting mobile ordering and what this means for emerging fraud trends, visit the Tracker’s Feature Story.

Deep Dive: Why QSRs Must Rethink Digital Identity To Protect Mobile Users

Diners are continuing to turn to mobile in higher numbers to order from their preferred restaurants even as some U.S. states expand their capacity guidelines for in-person dining. Fraudsters are also sticking with this mobile trend, targeting apps and mobile orders in higher figures as more customers grow comfortable with the channel. Fraudsters have increasingly begun to target peer-to-peer (P2P) payment apps over the past several years, with P2P app fraud rates expanding 733 percent between 2016 and 2019, for example. The growing prevalence of similar apps for restaurant ordering and payments is making them more of a top target for bad actors, meaning QSRs must be on their guard. Eateries need the ability to quickly and seamlessly discern between legitimate customers coming to these mobile platforms and fraudsters attempting to muscle their way inside.

To learn more about why eateries must structure their fraud protection strategies with digital identity at the center to better protect mobile-first users, visit the Tracker’s Deep Dive.

About The Tracker

The Mobile Order-Ahead Tracker®, a PYMNTS and Kount collaboration, offers coverage of the most recent news and trends pertaining to mobile order-ahead and how QSRs are working to quash security threats. The Tracker also includes a provider directory highlighting key players across the mobile order-ahead ecosystem.