We live in an increasingly digitized world – one where a multitude of goods and services are at our fingertips. We all love the speed and convenience of doing business online, but what we don’t love is when those businesses let us down. I saw a stat from Morgan Stanley last week that stated that 76% of people will stop doing business with a company after only two poor customer experiences.
Which brings me to my point about online fraud and the threat it poses to online businesses. Most people think about fraud in terms of theft, like bad actors stealing credit card numbers and using them to purchase expensive items. Of course, monetary theft is an enormous problem, but there’s a lot more at stake for digital businesses – alienated customers, digital platform disruptions, and ruined company reputations.
Here are three examples that underscore my point:
- TicketMaster – in mid-November 2022, Ticketmaster experienced a massive bot attack and as a result, the service was unable to process orders for Taylor Swift’s concert tour. The bot activity required TicketMaster to slow down and pause online sales, leaving millions of people unable to buy tickets.
- Chime – in response to a huge surge in fraudulent account openings in 2021, Chime, a US-based neobank serving millions, closed down several thousand customer accounts. The result was a huge backlash from legitimate banking customers, who could not use their Chime credit cards or access their cash.
- DraftKings – Online gambling company DraftKings’ stock fell 11% on November 21, 2022, the day after the company revealed that nearly 68,000 customers had their personal information exposed in a credential-stuffing attack, extending the stock’s decline to almost 50% that year.
The right approach is to treat fraud detection and prevention as a critical component of digital security, with the goal of protecting “critical digital infrastructure”. For online businesses, fraud is not simply the price of doing business. It represents potentially catastrophic business risk.
So what can organizations do to address this significant business risk? Here are four ways you can get started in the battle against online account fraud:
- Get ahead of it: Implement solutions that detect and prevent fraud as early as possible. In addition to traditional fraud monitoring, you need to focus on account-level fraud, which is how criminals gain access to your online business.
- Orchestrate security flows: Use automation to respond to fraudulent attacks in real-time. If you rely heavily on manual reviews to uncover fraud, your entire business could be compromised.
- Look beyond translation fraud: Don’t limit the scope of your fraud detection to transactions. Today’s fraudsters can harm your business in multiple ways - cheating, platform disruption, and coupon, promotion, and review abuse. While these types of fraud may not result in huge fraud losses, they can alienate customers and damage your brand reputation.
Take a layered approach to fighting fraud that combines user fingerprinting, behavioral analytics, and outside data to help you recognize attempts to bypass fraud controls.