Spoof-proof shopping during lockdown 3.0

By Rene Hendrikse, MD EMEA & LatAM, Mitek

While the Christmas rush may be over, with 51.3m transactions recorded by the Post Office in December, the arrival of Lockdown 3.0 means online shopping will continue to be on the rise yet again. As non-essential shops remain closed, older generations, the vulnerable, working parents, and many more will turn to online spending. Retailers and businesses who have shut up storefronts will focus their efforts on their online channels to keep their customers engaged.

Naturally, as more customers shift online, fraudsters are trailing right behind them.  The longer Lockdown 3.0 restrictions continue, the higher the likelihood of fraudsters jumping to take advantage of online shoppers will increase.

According to research from YouGov, adults are spending 15% more time online since lockdown began in March. Therefore, it comes to no surprise that almost a third of adults feel more vulnerable to fraudsters since the rise of internet shopping – this figure is only growing.

In fact, UK Finance reported that more than £27 million was lost to online fraud in the first half of 2020. They even warned online shoppers to stay alert to scams ahead of Black Friday – highlighting the high level of threat that fraud poses. Now, online shoppers will have to stay even more alert or risk falling victim to fraudsters.

Addressing a whole new host of security concerns is a reality retailers and businesses, large and small, must face head-on. To keep customers happy and spending, they must offer a simple experience without sacrificing security.

New Year, new waves of fraud

According to UK Finance, people interested in gaming, bicycles and clothing are most at risk of fraud. Increasingly, fraudsters have been tricking consumers into buying goods that never existed and will never be received, using long shipping delays as a cover: by the time you realise the company you bought from is unreachable and nowhere to be found online, it may be too late for you to report the fraud to your bank and get a refund.

A fraudster is only as good as his tools. Unfortunately, bad actors are constantly adapting to the latest technologies, whether through impersonating businesses and organisations that people regularly shop at or sending phishing emails to collect their personal data.

Sadly, there are many possibilities. Remember that email you received from a brand advertising the latest deals? If you check the email closely you might notice a dodgy address – perhaps a 0 instead of an o. Or maybe a fraudster simply steals login details so they can access saved card details, making further purchases themselves or even opening lines of credit under a stolen identity. The list goes on.

As more people are driven online with Lockdown 3.0, they’re more likely to fall into a carefully laid-out trap set by a fraudster. It might seem like this is out of retailers’ hands – but it’s not. If we know how fraud is happening, how can retailers ensure their customers are protected?

Drumming security into your resolutions

To welcome new customers and win their trust, retailers need to provide a seamless customer experience. Businesses want to reduce basket abandonment rates and ensure customers leave with a smile. A major part of winning trust is ensuring customers feel safe and secure when shopping online, and implementing the technologies that protect both the business and the customer.

These secure methods are already being used for millions of transactions every day. This has ramped up in recent months due to rules around Strong Customer Authentication (SCA) regulations. Customers now have to authenticate themselves using at least two of the following criteria: something they have, something they are and something they know.

Something you have could be an ID document or credit card. What you are could be your fingerprint or a selfie – something that biometrically identifies you as you. Something you know could be your PIN or the answer to a security question. It’s the combination of at least two of these criteria that authorises payments, working hard to keep fraudsters out.

When you use Apple AAPL +0.6% Pay for instance, you verify yourself with either your fingerprint or Face ID, in addition to giving your payment details. This checks off the ‘have’ and the ‘are’. Alternatively, identity verification technologies are used by payments providers like PayPal PYPL +0.4%. Everyone who signs up to PayPal, whether that is to send money around the world or to potentially buy or sell online, has several hoops to jump through to prove they are who they say they are – such as identity verification technologies.

By verifying your identity using a selfie and a photo of your ID document, shopping can feel a little more secure – but still only take a few seconds to process. What’s more, banks and payments providers often ramp up this verification for large transactions or after a period of consistent transactions – adding another layer of security to what could be seen as “riskier” payments.

Fostering digital trust

Buying online has never mattered more. Whether consumers are treating themselves to their favourite brand’s new deals, showing support for smaller businesses or doing their weekly shop for groceries and essentials, it’s vital people are guarded from fraudsters.

As we embrace the New Year, implementing secure payment methods will be top priority for retailers and businesses to achieve customer loyalty and attract new faces.  To help cultivate a sense of digital trust amid yet another lockdown, businesses and retailers will need to work hard to give customers peace of mind.