eNightmare On Fraud Street
By Cambria Valente, Forter
All over the world, retailers are grappling with monsters that creep beyond the boundaries of nightmares – fraudsters. Be this when an angry customer calls about a fraudulent charge on their card, or after Halloween ends when hundreds of “unworn” costumes are being returned, it’s frightening to consider the damages these villains can do.
Fraud costs the global economy yearly – and it’s likely to worsen. According to a recent survey conducted by OnePoll on behalf of Forter, 55% of respondents agreed that online fraud is harmful to both consumers and retailers and, yet, 39% admitted to considering conducting fraud in the face of an economic downturn.
It’s time to unmask these creatures and find out how they can get away with it. Who are they? What are their motives? And how can retailers stay ahead of these hauntingly-elusive foes?
Policy Users And Abusers
Policy abuse or “friendly fraud,” is when a customer finds a loophole in a store policy and uses it for personal gain. Like Jigsaw in the “Saw” movie franchise, scammers view these opportunities as a game. Examples of friendly fraud include finding a receipt on the ground and returning shoplifted items, wearing an item and then returning it (wardrobing) or a customer claiming an item was not delivered when it was.
Account Takeovers And Their Perpetrators
Just like Pennywise – the villainous clown in “It” – fraudsters tend to take on different disguises. Cybergangs like LAPUS$ and Conti have made headlines for teaming up to steal credentials in an account takeover (ATO) attack, which is when an adversary obtains legitimate credentials through phishing or other techniques and hides under the guise of a normal user. Once an account is compromised, identity-based fraud can be extremely difficult to detect, considering the advanced tactics and randomness of the different crime groups. This is all the more reason these forms of attacks can be such a horrific series of events to unfold for both a retailer (who was trusted with sensitive, identifiable information) and their customers whose identities are compromised.
Bots: The Fraud Of The Future
Occasionally, fraudsters will rely on other tools to help conduct mayhem. Similarly to how the Cenobites, led by notorious villain Pinhead, in Hellraiser were summoned by a mystical puzzle box, the use of bots in guiding scams is on the rise. Bots help fraudsters monitor for limited edition items – think sneaker drops or concert tickets – and purchase them in bulk once they’re released. Most often, the items are then resold for a much higher price, leaving loyal customers to pay up.
How do fraudsters get away with it? On websites that allow users to enter alternative email and shipping addresses, the bots evade traditional fraud detection systems which can’t tell that the transactions are coming from the same IP address. The result? Loyal customers lose out on the merchandise and retailers lose out on their long-term business.
On And Off Screen
Just like horror films, the monsters of the fraud world come in many shapes and sizes, from many different angles, and can pop out and scare you if you are not expecting them. They can significantly damage brand reputation in the eyes of the consumer and are always on the lookout to do their worst.
Fraud is no “Nightmare on Elm Street,” it's a real problem retailers come face-to-face with every day. Luckily, like the secret door, hidden weapon, or ancient spell that helps the protagonist make it out of the horror movie alive, one hero rises to the occasion to help retailers against fraud: automated fraud prevention solutions. With an identity-based system, merchants can do away with manual reviews and rely on identity-based learning systems that decide whether or not to approve a transaction based on the user’s purchase history. These solutions can go head-to-head with tactics such as policy abuse, ATO, and bots and make sure legitimate customers make it through the purchase journey safely and securely.