Retailers 'remain under-educated' on card-not-present fraud

Retailers are set to lose $130 billion in digital card-not-present (CNP) fraud between 2018 and 2023, according to a new Juniper Research study.

Increasingly complex approaches by fraudsters and retailers’ inertia in adapting to new fraud prevention requirements are likely to be the key factors behind the increases in fraud transaction value, Juniper said in its ‘Online Payment Fraud: Emerging Threats, Segment Analysis & Market Forecasts’ report.

The research claims that as cybercriminals seek to monetise their knowledge by targeting a wider, less tech-savvy audience, complex cross-channel fraud will become much more common, with retailers said to be ill-prepared to fight it.

Juniper notes that eCommerce merchants remain, to a large extent, focused on assessing fraud risk at the point of transaction. This means analysis in terms of session and behavioural monitoring, or validating the identity of a user to assess fraud risk before any transaction, is lacking, according to the research group.

Industry perception of fraud detection and prevention (FDP) is cited as one of the reasons behind this, with it viewed by retailers as a high-cost tool used only to prevent fraud.

“A layered FDP solution naturally helps directly preventing fraud, but it also offers major gains in terms of recovering potentially lost revenue through false positives,” explained research author Steffen Sorrell.

“This is something about which retailers remain under-educated, and has allowed fraudsters to capitalise on relatively low FDP spend.”

Juniper anticipates that digital payment organisations will spend $9.6 billion annually on FDP solutions in 2023, although the bulk of growth in this area over the five-year period is predicted to be driven by financial institutions and payment service providers.

What’s Hot on Essential Retail?