By KC Fox, Radial
Retailers today continue to face an uphill battle in the
ongoing fight against fraud. While wider adoption of the EMV chip and PIN
standard has reduced fraud at the point of sale, it has triggered an increase
in fraud in other channels — including online and mobile — as criminals look
for alternative ways to cheat the system.
There are many types of online fraud, but account-takeover
fraud continues to be the biggest threat to online consumers. Javelin’s 2018 Identity
Fraud Report found account takeover fraud tripled in 2017, resulting
in $5.1 billion in associated losses. By hijacking and gaining access to an
online account, fraudsters can leverage online credentials to change account
details, make purchases and gain access to other accounts. It’s a costly crime
that carries an average resolution time of 16 dedicated hours and $290 in
out-of-pocket expenses, according to the report. While the victim of the crime
is the unsuspecting consumer, retailers often lose credibility and trust in the
eyes of the consumer.
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Account takeovers have traditionally been hard to detect — fraudsters
are operating a trustworthy user account, making small changes and adjusting
their tactics frequently — and as we look to 2019, it will be impossible to
ignore.
Retailers need to implement effective fraud management
solutions to keep consumers safe. Although automated
screening services are a first step, this rule-based system does not evolve
over time or react to changing tactics. Protection now requires a much more
advanced approach, and in 2019 we’ll start to see retailers leveraging advanced
technology to stay one step ahead. Specifically, we’ll start to see:
- Improved machine
learning models: Leveraging data science, systems can recognize changing
patterns and irregularities in datasets — such as login attempts from different
devices or purchasing an unusually expensive item. - New data
sets to improve identification: As fraudsters grow more sophisticated and
better at replicating the look of legitimate customers, brands will start purchasing datasets outside of their network to
get a more accurate view and better recognize signs of potential account
takeover. - Sophisticated
velocity engines to identify fraud schemes: Sophisticated engines can detect account takeover during login to prevent damage before it
even begins.
As Senior Vice President, Technology Services, KC Fox heads Radial’s technology team. He is responsible for
leading more than 200 retailers and brands to increased revenue and customer
loyalty through Radial’s omnichannel technology and payment and fraud
solutions. Fox has more than 20 years of experience in the technology space
ranging from startups to Fortune 500 brands. Previously, he held various
leadership roles at eBay and PayPal where he oversaw the company’s developer
platform, advancing the way PayPal integrated with partnering platforms and
solutions.
