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Fraud risk increases as e-commerce grows

Shopping in person is fast becoming an alien concept for today’s time-pushed, convenience-hungry consumer, says Martin Walshaw, senior engineer at F5 Networks.

The latest forecasts by eMarketer claim that worldwide business-to-consumer (B2C) e-commerce sales will increase by 20,1% this year to hit a mindboggling $1 500 trillion. Soaring use is being driven by, among other things, expanding online and mobile user bases in emerging markets, advancing shipping and payment options, and the relentless push by major brands into new international markets.

Nice work if you can get it, but long-term business success is becoming trickier and riskier by the day.

In particular, retailers are sweating over how to best safeguard their operations against cyber-attackers intent on upsetting the e-commerce cart.

Putting a global spotlight on the retail sector’s cyber vulnerability, BT research recently found that 34% of IT decision-makers claimed their organisations were hit by Distributed Denial of Service (DDoS) attacks in the past year; 80% of these were targeted more than once.

Although 56% said that DDoS attacks are becoming more effective at breaching security defences, only 17% were convinced that they allocate sufficient resources to tackle the problem. The potential for reputational hits is clear – 53% reported that their systems were taken down for more than six hours and, on average, customer complaints shot up 28% in the wake of an attack.

Then there’s the clear and present danger of fouling up the sacred duty of care for consumers’ personal data. A study by CNN Money reported that almost half of American adults had their personal information exposed in the past year. This includes things like debit/credit card numbers, passwords, phone numbers, email addresses, birthdays, physical address – you name it.

News of such threats spreads fast and weariness is understandably starting to creep in: nearly three in 10 global consumers (29%) claim to not trust retailers to protect stored personal and financial data against hacking attempts and data breaches, according to a study by ACI Worldwide and Aite Group. The study polled more than 6 100 consumers across 20 countries, including 314 people from South Africa.

A key part of coping with the threat is shoring up mobile payments, which Gartner has forecast to grow around threefold by 2017 to around $721 billion worth of transactions by more than 450 million users.

For the end user, the ability to conduct payments on mobile is extremely convenient. For businesses and financial institutions, the convenience and security of mobile payments can bring new revenue sources via e-commerce and enhance customer loyalty through programmes that leverage consumers’ mobile data.

But such tantalising prospects will not transpire without some form of fraud protection.

Fortunately, there are plenty of powerful technological fixes to be had.

One of the available solutions starting to gain significant traction is the clientless online fraud protection system. This enables organisations to arm devices in real time against all manner of online threats without the user having to do anything, snuffing out the danger of things like malicious HTML changes or script injections before the trouble starts.

Today, device and behavioural variables can be vividly put in the spotlight, seamlessly clearing the way for honest consumers to shop away while malware or nefarious bots are left out in the cold.

Switched-on retailers can also give customers invaluable credit card peace of mind by using solutions that rigorously encrypt at the application level, ensuring that any data intercepted by troublemakers is impenetrable.

Security is the kingmaker of the e-commerce world. Those that get it right will reap rewards and customer loyalty. Those that don’t will soon fall by the wayside.



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