Retailers have little option but to watch over their e-commerce channels for irregularities: odd requests from first-time buyers, unusually large purchases and sudden changes in a known customer’s shopping behaviour can all be signs of online fraud.
Unfortunately, they have a Catch-22 situation on their hands in the fight against crime: sometimes the protections they put in place can cause even more harm than the criminals do. Adopt an overly cautious approach to the threat of identity and credit card theft, and you run the risk of false positives and declining genuine buyers. Fail to address the work of bad actors, however, and you may be forced to issue frequent chargebacks to card theft victims, spoiling your relationships with credit card companies and losing your ability to accept these payments – a death knell for many online businesses.
At the same time, some fraud prevention solutions can end up actually deterring buyers who are reluctant to reveal any of their personal information when asked to confirm their identities, worried that they themselves might inadvertently fall victim to a data breach. Retailers have often found customers to be highly likely to abandon their purchases at the authentication point, simply because the verification box looks too much like a phishing scam.
Tom Donlea, VP of Asia Pacific for Ekata, an identity verification company, has seen the difficulties retailers face in dealing with fraud first hand. According to Donlea, the problem has only escalated since the number of new users in the region took off during the pandemic: recent Google and Temasek figures show that Southeast Asia alone has seen some 40 million people coming online since the beginning of the crisis, largely due to a lack of better options to conduct their daily transactions during the lockdowns.
“If a retailer has never seen a consumer before, they’re going to be really careful about how they’re going to allow that person to shop,” says Donlea. “They’re not going to allow me to buy 10 $5000 TVs from their site, right? But the problem is that during the pandemic, the volumes have gone up, and these companies have new identities coming onto their sites, making it much harder to filter through who is legitimate and who is not. So fraud as a percentage of their bookings is going up. The amount of time retailers have to spend reviewing these transactions is going up too, and some retailers who have furloughed fraud prevention staff are doing it with a skeleton crew. These are the challenges that we see in online retail.”
Retailers throughout the Asia Pacific region are often reluctant to use regulated protection systems that might discourage customers from buying, while they remain largely unaware of the solutions that are available to them. Ekata – formerly known as Whitepages Pro – is a system that verifies identity in a non-regulated way on a global basis, providing a solution that is far less likely to interrupt the customer checkout process.
“We’re not doing credit checks,” says Donlea to clarify Ekata’s work. “We don’t need to know if the customer owns property or has a criminal record. We just need to know if the customer is who he says he is before we sell him a TV.”
The firm’s products offer retailers the benefit of its vast database of known consumers, established in partnership with the thousands of MNCs it partners with. The system can convey a high level of confidence that a customer is genuine, based on previous associations of the same name, email address, mobile phone number and IP address used in combination on other global sites. In matching new transactions against this pool of data, the firm aims to substantially increase retailer confidence in either rejecting fraud or accepting a likely safe transaction, in any market in the world. The system has also proven highly effective in Australia, where companies often struggle with simply matching phone numbers to names without bumping against privacy regulations.
“It’s been increasingly obvious that Ekata has really good data on consumers,” explains Donlea, “and I think it’s important for retailers to know that Ekata is still very focused on privacy and security regulations. We don’t work with marketing teams, we don’t provide our information for forward lookups, and we have really good data in Australia and good traction with large retail groups there, and we can do this type of work simply because we’re preventing fraud online.”
For more information about the fraud prevention service, download Ekata’s free ebook Grow Cross-Border eCommerce and Mitigate Fraud.