Stopping the Post-EMV Surge in Online Fraud

Stopping the Post-EMV Surge in Online Fraud

The predicted increase in online fraud in the U.S. has arrived with the adoption of chip card technology (also known as EMV).

According to data from ACI Worldwide, while online transactions grew in the U.S. by 12 percent, there was a 43 percent increase in online fraud. This spike has been expected, given what was seen in the countries that have already implemented EMV. They experienced a significant reduction in counterfeit card fraud, while online fraud spiked dramatically.

The end of 2016 saw nearly 1.81 million merchants in the U.S. switch to accepting EMV chip cards, more than double the year previous.  Experts therefore expect the online fraud figure to continue to rise as even more offline retailers adopt EMV for use in point-of-sale (POS) transactions. As fraudsters are shut out of the in-store channel by EMV, they turn their attention to the online one. Thieves are becomingly increasingly sophisticated in the area, now using fully automated bots to place fraudulent orders using stolen customer data.

Such personal data is now in abundant supply on the black market due to wide-scale data breaches at large retailers and financial institutions. According to Javelin, the number of identity-theft victims rose to a record 15.4 million last year from 13.1 million in 2015. The use of automated botnets to commit online fraud in the U.S. increased by 47% between Q3 2015 and Q2 2016 according to PYMNTS.com. That figure is even higher for orders involving luxury goods—an increase of 87% during the same period.

To fend off these attacks, businesses continue to seek technology to help them stem the tide. Juniper predicts online retailers and financial institutions will increase spending by 30 percent on fraud prevention solutions, hitting $9.2 billion annually by 2020.

Reducing Online Fraud Without Friction

The greatest asset in online payment—the high speed and volume it enables—is also potentially its weakest point. It’s clear the prevention of fraud requires a more thorough review of transactions before they are processed but, at the same time, adding friction to slow down and reduce purchasing volume is not an acceptable solution for either businesses or consumers.

Retailers and other enterprises need the means to protect those transactions from fraud, while still maintaining a positive customer experience. Fortunately, there is a method of tightening security in online purchases that does not introduce friction or otherwise slow down transactions. Through the use of software, retailers can collect information from the device being used to place an order to better assess transaction riskiness and identify potential fraudsters. By noting geographical and time attributes, plug-ins, IP addresses, and other relevant information contained within the device, merchants can better uncover high-risk indicators and establish the device’s trustworthiness.

Armed with this information, online merchants can more precisely identify the bots and other fraudulent techniques and prevent fraudsters from placing orders while continuing to deliver outstanding service to their genuine customers. No friction needs to be added to the ordering process at all. In this system, retailers get the best of both worlds—fast transactions that effectively lock out the fraudsters.

With the widespread adoption of EMV in the U.S., the surge in online fraud is coming. Fortunately, the solution to it is out there and it is only up to retailers to seize it.  


About the Author

Michael Lynch is the Chief Strategy Officer at InAuth.

Featured

  • Survey: 54% of Organizations Cite Technical Debt as Top Hurdle to Identity System Modernization

    Modernizing identity systems is proving difficult for organizations due to two key challenges: decades of accumulated Identity and Access Management (IAM) technical debt and the complexity of managing access across multiple identity providers (IDPs). These findings come from the new Strata Identity-commissioned report, State of Multi-Cloud Identity: Insights and Trends for 2025. The report, based on survey data from the Cloud Security Alliance (CSA), highlights trends and challenges in securing cloud environments. The CSA is the world’s leading organization dedicated to defining standards, certifications, and best practices to help ensure a secure cloud computing environment. Read Now

  • Study: Only 35 Percent of Companies Include Cybersecurity Teams When Implementing AI

    Only 35 percent of cybersecurity professionals or teams are involved in the development of policy governing the use of AI technology in their enterprise, and nearly half (45 percent) report no involvement in the development, onboarding, or implementation of AI solutions, according to the recently released 2024 State of Cybersecurity survey report from ISACA, a global professional association advancing trust in technology. Read Now

  • New Report Series Highlights E-Commerce Threats, Fraud Against Retailers

    Trustwave, a cybersecurity and managed security services provider, recently released a series of reports detailing the threats facing the retail sector, marking the second year of its ongoing research into these critical security issues. Read Now

  • Stay Secure in 2024: Updated Cybersecurity Tips for the Office and at Home

    Cyber criminals get more inventive every year. Cybersecurity threats continue to evolve and are a moving target for business owners in 2024. Companies large and small need to employ cybersecurity best practices throughout their organization. That includes security integrators, manufacturers, and end users. Read Now

Featured Cybersecurity

Webinars

New Products

  • ResponderLink

    ResponderLink

    Shooter Detection Systems (SDS), an Alarm.com company and a global leader in gunshot detection solutions, has introduced ResponderLink, a groundbreaking new 911 notification service for gunshot events. ResponderLink completes the circle from detection to 911 notification to first responder awareness, giving law enforcement enhanced situational intelligence they urgently need to save lives. Integrating SDS’s proven gunshot detection system with Noonlight’s SendPolice platform, ResponderLink is the first solution to automatically deliver real-time gunshot detection data to 911 call centers and first responders. When shots are detected, the 911 dispatching center, also known as the Public Safety Answering Point or PSAP, is contacted based on the gunfire location, enabling faster initiation of life-saving emergency protocols. 3

  • AC Nio

    AC Nio

    Aiphone, a leading international manufacturer of intercom, access control, and emergency communication products, has introduced the AC Nio, its access control management software, an important addition to its new line of access control solutions. 3

  • QCS7230 System-on-Chip (SoC)

    QCS7230 System-on-Chip (SoC)

    The latest Qualcomm® Vision Intelligence Platform offers next-generation smart camera IoT solutions to improve safety and security across enterprises, cities and spaces. The Vision Intelligence Platform was expanded in March 2022 with the introduction of the QCS7230 System-on-Chip (SoC), which delivers superior artificial intelligence (AI) inferencing at the edge. 3