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

  • Maximizing Your Security Budget This Year

    Perimeter Security Standards for Multi-Site Businesses

    When you run or own a business that has multiple locations, it is important to set clear perimeter security standards. By doing this, it allows you to assess and mitigate any potential threats or risks at each site or location efficiently and effectively. Read Now

  • New Research Shows a Continuing Increase in Ransomware Victims

    GuidePoint Security recently announced the release of GuidePoint Research and Intelligence Team’s (GRIT) Q1 2024 Ransomware Report. In addition to revealing a nearly 20% year-over-year increase in the number of ransomware victims, the GRIT Q1 2024 Ransomware Report observes major shifts in the behavioral patterns of ransomware groups following law enforcement activity – including the continued targeting of previously “off-limits” organizations and industries, such as emergency hospitals. Read Now

  • OpenAI's GPT-4 Is Capable of Autonomously Exploiting Zero-Day Vulnerabilities

    According to a new study from four computer scientists at the University of Illinois Urbana-Champaign, OpenAI’s paid chatbot, GPT-4, is capable of autonomously exploiting zero-day vulnerabilities without any human assistance. Read Now

  • Getting in Someone’s Face

    There was a time, not so long ago, when the tradeshow industry must have thought COVID-19 might wipe out face-to-face meetings. It sure seemed that way about three years ago. Read Now

    • Industry Events
    • ISC West

Featured Cybersecurity

Webinars

New Products

  • EasyGate SPT and SPD

    EasyGate SPT SPD

    Security solutions do not have to be ordinary, let alone unattractive. Having renewed their best-selling speed gates, Cominfo has once again demonstrated their Art of Security philosophy in practice — and confirmed their position as an industry-leading manufacturers of premium speed gates and turnstiles. 3

  • Camden CM-221 Series Switches

    Camden CM-221 Series Switches

    Camden Door Controls is pleased to announce that, in response to soaring customer demand, it has expanded its range of ValueWave™ no-touch switches to include a narrow (slimline) version with manual override. This override button is designed to provide additional assurance that the request to exit switch will open a door, even if the no-touch sensor fails to operate. This new slimline switch also features a heavy gauge stainless steel faceplate, a red/green illuminated light ring, and is IP65 rated, making it ideal for indoor or outdoor use as part of an automatic door or access control system. ValueWave™ no-touch switches are designed for easy installation and trouble-free service in high traffic applications. In addition to this narrow version, the CM-221 & CM-222 Series switches are available in a range of other models with single and double gang heavy-gauge stainless steel faceplates and include illuminated light rings. 3

  • Compact IP Video Intercom

    Viking’s X-205 Series of intercoms provide HD IP video and two-way voice communication - all wrapped up in an attractive compact chassis. 3