Six out of every 10 businesses are experiencing the same or more fraudulent losses online compared with a year ago according to a study by Experian which also revealed that fraud trends and patterns continue to grow across the world. The research found that most businesses — 72% — cited fraud as a growing concern.
The Global Fraud and Identity Report showed that businesses need to better identify their customers to help combat online fraud. Currently, most businesses tend to demonstrate suspicion when it comes to preventing fraud, following a route of detection rather than permission or trust. 71% know they deny more transactions than they should. This doesn’t just lead to a loss of sales, it’s also likely to damage the lifetime value of that customer.
Business leaders agree that if they were more precise in identifying customers and avoiding denial of real transactions, they would see an increase in revenue. In fact, 84% of businesses say the need for fraud risk mitigation could be reduced if they were certain about customers’ identity.
As businesses undergo digital transformations, they recognise the importance of trust and the need for technology to deliver it. “Whether it’s in our favourite coffee shop or shopping online, being recognised by the people we do business with goes a long way,” said Kathleen Peters, Experian’s senior vice president of Global Fraud and Identity. “Recognition helps to stimulate trust, and trust is what makes all of us feel safe and protected. Trust is the currency of digital commerce. Technology is the enabler that underpins it.”
The study show that while consumers want to be recognised, they also expect online banks and retailers to do everything they can to protect their information and secure their transactions. Nearly seven out of every 10 consumers like security protocols when they transact online, because it makes them feel protected. But that doesn’t mean they like too many hurdles and inconveniences. The most effective fraud prevention and identity strategies keep people safe without disrupting their experience.
“Fraud is always evolving, and fraudsters are becoming more resourceful. Good fraud detection requires multiple strategies, including better customer recognition,” added Peters. “Simply put, the better you recognise your customer, the better you can recognise fraud.”
The study also showed that a quarter of consumers had abandoned a transaction because setting up a new account required too much information, while over a third said they would transact more online if there were fewer security hurdles.