What are Major Retailers and Banks Doing to Prevent Fraud?

While the opportunities afforded to businesses from digital technology are huge and have created new markets for many firms, emerging and developing technology has also brought about some challenges and problems. Fraud is a huge concern for retailers and banks these days, and such organizations have to work hard to remain up to date with the fraudsters and criminals that threaten their work.

One of the worrying aspects of digital fraud is that it covers so many different areas of business engagement and interaction. In March 2017, a report issued by The&Partnership suggested that firms would lose over $16 billion in advertising fraud (sometimes known as click fraud) alone. That is just one small component of digital engagement and interaction, which means that the overall sums of money lost by firms due to the increased number of ways that digital fraudsters and hackers can impact on their business.

In addition to advertising or click fraud, other types of digital fraud that companies have to be aware of include:

  • Online retail fraud
  • Smishing, vishing and phishing
  • Spam emails
  • Malware
  • Proxy servers and botnets

Of course, while the loss of money can be highly damaging for a company, for many, the loss of reputation, trust, and respect is what harms a business. If consumers feel that a company cannot be used securely, they will not use the firm and will tell their friends and associates about their concerns. A minor fraud problem becoming public knowledge can have a huge impact on businesses, which is why online businesses and organizations have to take steps to prevent fraud.

Ways that banks and physical retail stores prevent fraud

While the movement towards card payment has brought about great convenience for shoppers, there is a risk about whether the person using the card is the person authorized to use it. The doubt about who should be allowed to use a card has been combatted, to a degree, through the emergence of Chip and Pin technology. This technology sees the consumer presenting their card and having to type in a four-digit Personal Identification Number (PIN) to authorize the transaction. This quick and easy process provides consumers with peace of mind while also giving retailers and organizations confidence the transaction is a genuine one. Many online retailers use a similar process where customers have to provide a verification code at the point of sale to conclude the transaction. This stage places a barrier that should prevent people who have stolen cards or who have scammed or cloned cards from concluding a purchase.

The method isn’t foolproof, particularly if card owners are careless with retaining their card number, but it does provide a preventative measure in minimizing retail fraud.

Online transactions provide fresh challenges in preventing fraud

When it comes to online retail fraud or major bank transfers, there is a need to provide a robust checking measure. Yes, some retailers do ask for a verification code for a particular card but this won’t work in all situations. There are times when there is a need for the business to verify who is authorizing the purchase and this is where a digital signature can be of significant benefit.

This links back to the use of checks for making a payment, and the traditional method of comparing the signature at the time of purchase with the signature on a check guarantee card. In the digital era, companies like DocuSign, with Keith Krach at the helm, have led the way in enabling users to store their digital signature and then use this as verification for purchases or transactions. Being able to assign a name to a transaction is a great comfort for many businesses and it is easy to see why this verification process is a growing security measure being used by many companies.

It is clear that online retail is here to stay and as the opportunity to trade and deal around the world grows, more and more companies will supply, partner and sell to other business around the world. This means that there needs to be an increasing focus on accountability and authorization of major transactions and verified signatures of enabled employees will be an integral part of preventing digital fraud in the future. Given the importance of staying safe online and developing a reliable reputation, most firms will be delighted to see new and reliable ways to make deals.

Written By
Sydney White is a Texas-born stay at home mom who enjoys spending time with her family, bargain hunting and, of course, writing. She is currently the editor-in-chief of Snipon.com.

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