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Lessons Learned On The Desktop May Not Apply To Mobile eCommerce Fraud

October 13, 2017 0 Comments RSS Feed

Lessons Learned On The Desktop May Not Apply To Mobile eCommerce Fraud

Photo by Mingwei Li on Unsplash

No Magento eCommerce retailer can afford to ignore customers who prefer to make purchases on mobile devices. Although the desktop is still hanging on as a major source of eCommerce sales, particularly for big ticket or complex purchases, providing a positive mobile experience should be a priority — something that Magento makes easy with responsive eCommerce themes. None of this is news for eCommerce retailers, who are well aware of the importance of providing a great mobile experience.

But while most eCommerce merchants have invested in creating mobile-friendly eCommerce stores, less attention has been paid to the way fraud and security differs on mobile compared to the desktop. A recent report from Riskified, a cloud eCommerce fraud prevention service, emphasizes the importance of tailoring fraud prevention strategies to take account of differing purchase behaviors on mobile as compared to the desktop.

Many retailers don’t have any mobile-specific fraud detection in place, which, because shopper behavior is different on mobile, can lead to both false negatives and false positives. False negatives can be significant source of lost revenue for retailers, and false positives may disrupt the shopping experience of genuine customers and can lead to lost sales. Either way, accurate fraud prevention can help safeguard revenue and profit.

In many ways the news is good where mobile eCommerce fraud is concerned. According to the Riskified report, online retailers are generally safe to approve around 95% of mobile retail purchases, compared to around 90% of desktop purchases.

But that doesn’t mean the impact of mobile eCommerce fraud is trivial. While fraud around big ticket items is substantially lower on mobile, the risk of fraudulent purchases of digital products is four times higher than for physical goods. eCommerce merchants can safely accept around 80% of mobile purchases for digital products, a fraud rate that could seriously hurt eCommerce merchants, especially when margins for many digital products are quite slim.

What can online retailers do to reduce the chance of eCommerce fraud from mobile devices?

Firstly, recognize that desktop models of fraud avoidance aren’t always appropriate to mobile. The first step in developing an accurate understanding of eCommerce fraud is to build a model of shopper and fraud behavior, taking the purchasers’ platform into account.

Many fraud prevention experts suggest that retailer focus on what good customers look like, and investigate transaction more closely if they depart from that pattern. Of course, an unusual purchase doesn’t always signify fraud, but it at least merits a closer look.

Manual fraud spotting can be an expensive and time-consuming proposition for eCommerce retailers, so it’s in their interest to automatically flag as many fraudulent transactions as possible before looping in staff members to make a final decision.

Fraud detection services use a variety of factors — IP address, location, shopper data, and device, among others — to create a score that reflects their assessment of the likelihood that a transaction is fraudulent.

Well-regarded fraud flagging services include Riskified, the authors of the study we’ve discussed here, and Signifyd, a fraud prevention service founded by former PayPal fraud prevention experts. Both platforms integrate well with Magento.

Posted in: Security