Help Preventing a Coronavirus-Fueled Fraud Pandemic

Jul 20 2020 | PayPal Editorial Staff

The coronavirus could be bringing more than loyal customers to your website—it may also be attracting fraud. Your payments platform must be able to scale and adapt.
Large brick-and-mortar retailers and major brands have been working overtime to adapt to business in a coronavirus world. They’ve leaned heavily on their ecommerce operations to keep the lights on and customers happy during quarantine. 

Even as some lockdown orders begin to lift, it’s likely that many customers will still want to avoid crowded stores and order online for home shipping or curbside pickup. For the foreseeable future, the only interaction that some enterprise retailers can expect to have with many customers will be online. Unfortunately, the coronavirus is potentially bringing more than just loyal customers to your website—it may also be attracting fraud.  

Coronavirus is accelerating digital transformation and fraud  

The silver lining of the pandemic has been the boost to ecommerce. Every day feels like Cyber Monday, with digital sales volumes increasing 210% between February and April.1 The bad news is that online fraudsters may be taking advantage of the increased online activity to blend in with legitimate sales and try to get away with fraud. TransUnion reported that suspected fraudulent digital transactions rose 5% in the month after the coronavirus was declared a global pandemic, with more than 100 million suspected fraudulent transactions from March 11 to April 28.2 

In some cases, enterprise ecommerce systems are easier to exploit than usual. Why? As brands quickly scale their ecommerce operations to handle online ordering and service, they may neglect to install the robust security safeguards needed to help keep customers safe.  

Meanwhile, more online shopping means more customers are opening up new accounts using the same login credentials. Cybercriminals are on the lookout for opportunities to use hacked customer data to take over accounts and make unauthorized purchases.  

Regardless of what's going on in the world, keeping customers and data secure is a full-time job for enterprises. But in the midst of a pandemic, unprepared IT security teams may find that there's more fraud than they can handle. This can not only cost the company in lost revenue and product, but also lost trust once a customer discovers their information was stolen. 

Finding a way to fight back against fraud 

In a brick-and-mortar location, an enterprise may only needs to worry about fraud happening one customer and cashier at a time. But like anything online, digital fraud can scale rapidly.  

As fraudsters use their own sophisticated technology to steal data and commit fraudulent transactions, it may be unrealistic to expect a human security team to manually mount a defense. With today's advanced fraud management solutions, IT teams have the technology they need to fight back.  

It’s important to choose a fraud solution that can strike the delicate balance between preventing fraudulent transactions and approving legitimate transactions. The platform must be able to scale and adapt to evolving fraud patterns without causing checkout friction or increasing the risk of false declines.  

An advanced fraud risk management solution can help you: 
  • Look beyond your data: By harnessing information from a variety of sources, you can get the real-time information you need to know if a transaction is legitimate, so you can stop fraud before you accept the transaction.  
  • Consider the source: Device fingerprinting can sniff out activity coming from known fraudsters, providing even more protection.  
  • Continue to adapt: Smart fraud solutions can automatically learn, grow, and adapt to both your changing business needs and the ever-evolving tactics of cybercriminals, improving your defenses with every transaction.  
  • Test before you commit: Backtest your new rules with your historical data to ensure effectiveness. 
  • Seamlessly orchestrate decisions: Scale your fraud team's impact by automatically approving, rejecting, or flagging transactions for review.  
  • Gain new insights: Visualizations and dashboards make it simple to access critical metrics at a glance, so you can decide where to focus next.  

Help prevent fraud to protect customers and your business 

PayPal Fraud Protection leverages our extensive, two-sided network of global intelligence to help you accurately detect and block fraud in real-time. When paired with your own internal transaction review policies, this can help you reduce fraud, along with things like chargebacks, false positives, and checkout friction that can impact the customer experience. Our built-in risk solutions include: 
  • Advanced Fraud Protection uses machine learning technology powered by Simility, a PayPal service, designed to give large enterprises the dynamic decisioning capabilities they need to manage things like account signup and transactions.  
  • Fraud Protection technology that gives you more insight and control of your decisioning process for card transactions.  
  • Risk APIs that help you detect patterns across cross-channel data, so you can incorporate risk scores and reason codes into your existing fraud prevention platform.  
While the pandemic itself will hopefully soon decline, its impact on your business is likely here to stay. The right fraud solution is key to helping you keep your transactions secure. To find the right enterprise fraud solution for your business, read 5 Questions to Ask When Choosing a Fraud Solution.  


 
The content of this article is provided for informational purposes only. You should always obtain independent business, tax, financial, and legal advice before making any business decision.

Sources:
1PowerReviews Market Trends Snapshot – May 2020, PowerReviews, May 2020. 
2Digital Fraudsters Increase Attacks Against Multiple Industries During Pandemic; Use COVID-19 Scams to Target Younger Generations, TransUnion, May 2020.

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