Companies must improve fraud prevention before going mobile
Feb 16, 2013 Walt Wojciechowski
The vast majority of consumers plan to purchase mobile devices - particularly smartphones and tablets - in the near future, if they haven't already.
As a result, mobile electronic payments and transactions are becoming extremely common. A recent MarketsandMarkets report, for instance, projected that the mobile ecommerce market will experience an 82.4 percent compound annual growth rate from 2013 to 2018, exploding from its current value of $13.8 billion to nearly $280 billion.
At the same time, hackers are also gravitating toward mobile platforms to conduct their attacks, according to a recent FICO study.
"Criminals are migrating to the easiest way of using compromised cards, which today is the internet," said Martin Warwick, fraud chief in Europe, the Middle East and Africa at FICO.
Effective fraud prevention well within reach
Consumers are increasingly using their tablets and smartphones to shop online, according to a recent Adobe survey. The study revealed that more than half of tablet owners and nearly 30 percent of smartphone users already make purchases on their mobile devices, while app usage is expected to grow 15 percent from 2012 to 2013.
This should also cause cybercriminals to focus more on mobile and online platforms as a means of launching attacks. The FICO report found that card-not-present (CNP) fraud - or fraudulent online, mail and phone transactions - comprised 74 percent of all card fraud losses in Europe and 72 percent of incidents. Warwick said that fraudulent internet transactions are twice as prevalent as illegitimate credit card sales.
But if the FICO study is any indication, establishing effective fraud prevention measures is well within reach for companies.
"CNP fraud is now the top focus for card fraud across the region, as issuers look for new technology and best practices to stop the most widespread form of card fraud," Warwick said.
As Warwick noted, "countries with the strongest fraud detection systems have reduced fraud relative to countries that are lagging on the technology adoption curve." The FICO study revealed that as the focus on preventative measures has grown across Europe, total CNP losses have declined significantly.
In countries with strong fraud prevention strategies, for instance, approximately 1 percent of cards fell victim to fraud between April 2010 and March 2012. In addition, despite an increase in the total number of incidents, the FICO study found that CNP losses dropped from $37.5 million to $13.4 million during that time period.