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

  • Gaining a Competitive Edge

    Ask most companies about their future technology plans and the answers will most likely include AI. Then ask how they plan to deploy it, and that is where the responses may start to vary. Every company has unique surveillance requirements that are based on market focus, scale, scope, risk tolerance, geographic area and, of course, budget. Those factors all play a role in deciding how to configure a surveillance system, and how to effectively implement technologies like AI. Read Now

  • 6 Ways Security Awareness Training Empowers Human Risk Management

    Organizations are realizing that their greatest vulnerability often comes from within – their own people. Human error remains a significant factor in cybersecurity breaches, making it imperative for organizations to address human risk effectively. As a result, security awareness training (SAT) has emerged as a cornerstone in this endeavor because it offers a multifaceted approach to managing human risk. Read Now

  • The Stage is Set

    The security industry spans the entire globe, with manufacturers, developers and suppliers on every continent (well, almost—sorry, Antarctica). That means when regulations pop up in one area, they often have a ripple effect that impacts the entire supply chain. Recent data privacy regulations like GDPR in Europe and CPRA in California made waves when they first went into effect, forcing businesses to change the way they approach data collection and storage to continue operating in those markets. Even highly specific regulations like the U.S.’s National Defense Authorization Act (NDAA) can have international reverberations – and this growing volume of legislation has continued to affect global supply chains in a variety of different ways. Read Now

  • Access Control Technology

    As we move swiftly toward the end of 2024, the security industry is looking at the trends in play, what might be on the horizon, and how they will impact business opportunities and projections. Read Now

Featured Cybersecurity

Webinars

New Products

  • Automatic Systems V07

    Automatic Systems V07

    Automatic Systems, an industry-leading manufacturer of pedestrian and vehicle secure entrance control access systems, is pleased to announce the release of its groundbreaking V07 software. The V07 software update is designed specifically to address cybersecurity concerns and will ensure the integrity and confidentiality of Automatic Systems applications. With the new V07 software, updates will be delivered by means of an encrypted file. 3

  • PE80 Series

    PE80 Series by SARGENT / ED4000/PED5000 Series by Corbin Russwin

    ASSA ABLOY, a global leader in access solutions, has announced the launch of two next generation exit devices from long-standing leaders in the premium exit device market: the PE80 Series by SARGENT and the PED4000/PED5000 Series by Corbin Russwin. These new exit devices boast industry-first features that are specifically designed to provide enhanced safety, security and convenience, setting new standards for exit solutions. The SARGENT PE80 and Corbin Russwin PED4000/PED5000 Series exit devices are engineered to meet the ever-evolving needs of modern buildings. Featuring the high strength, security and durability that ASSA ABLOY is known for, the new exit devices deliver several innovative, industry-first features in addition to elegant design finishes for every opening. 3

  • FEP GameChanger

    FEP GameChanger

    Paige Datacom Solutions Introduces Important and Innovative Cabling Products GameChanger Cable, a proven and patented solution that significantly exceeds the reach of traditional category cable will now have a FEP/FEP construction. 3