Digital banking, mobile transactions, digital payments, and e-commerce are synonymous with consumer and retailer convenience and experience today. They are an integral part of how we function as a globally connected society. Despite this, they’ve also increased the risk.
Money fraud, credit card fraud, online and mobile scams, identity and information theft, among many other cybersecurity risks have been on the rise for years. For example, in digital CNP (Card-Not-Present) transactions alone, such as with e-commerce shopping payments, retailers are set to lose $130 billion in fraud between 2018 and 2023.
According to another study, the most common form of e-commerce fraud that caused merchants stress were identity theft (71%), phishing (66%), and account theft (63%). Most often credit cards were the target because the fraudster did not need much information to complete a CNP transaction, which we’ll discuss shortly. Likewise, 43% of retailers say that a top challenge is verifying a consumer’s identity digitally.
It’s no wonder why retail fraud attempts are doubling year-over-year and have have tripled since 2017. Today we’ll briefly discuss the plethora of both simple and sophisticated digital money frauds and risks to watch out for as you shop online as well as tips for keeping your money safe online.
Identity theft has perhaps the most serious and scariest consequences if you fall victim to it. This is where your personal information, such as your Social Insurance Number (SIN), name, address, and bank details, have been compromised by a fraudster. These imposters can use your information to open new credit cards, lines of credit, and make purchases in your name. Identity theft victims can even end up with false criminal records.
According to a 2019 Identity Fraud Study by Javelin Strategy & Research, the number of identity fraud victims in 2018 was down to 14.4 million from 2017’s record high of 16.7 million. However, 2018 victims tended to have a much larger financial burden.
Safety tip: Avoid sharing your personal financial information and never divulge sensitive account details to strangers or unknown sites, emailers, phone callers, etc. Only make online purchases with credible e-commerce sites. Monitor your accounts frequently and be careful with your receipts and printed financial statements.
Credit card fraud is a type of identity theft and consists of two kinds: existing-account fraud and new-account fraud. With existing-account fraud, the fraudster accesses your existing credit card by stealing your information and/or login details from you or a retailer. For example, if an e-commerce site is hacked or you fall victim to a phishing attack and share account details, the imposter could make online CNP purchases.
New-account fraud is more similar to identity theft in that the fraudster uses your SIN, address and other personal information to open a new credit card account in your name. Most often, and in both cases, the fraudster will start out by making small purchases to ensure that the cards work before making larger purchases.
Safety tip: As a consumer, never share your financial information and always check the credibility of a website, ATM, gas pump, and other various digital payment methods before you buy. As a merchant, e-commerce shop, or institution, ensure that your website and any third-party applications or partners are armed with up-to-date cybersecurity and fraud detectors.
CNP fraud is rampant in our digital landscape and is a form of credit card fraud. An example of this would be if a fraudster gained access to your credit card information—security code, expiry date and all—and made online purchases easily. Thankfully, many merchant’s banks are required to reimburse the fraud victims when a CNP transaction is fraudulently made at their expense.
Safety tips: Many merchants and banks have a number of fraud mitigation solutions built into their coding or through third-party applications and cybersecurity vendors. It is up to e-commerce sites to protect payments data and their consumers from fraud. Consumers should follow the same tips as above to protect their information from all types of scams, fraud, and risks.
According to a recent Juniper study, digital payment players, such as ourselves here at VoPay, will spend $9.6 billion annually on Fraud Detection and Prevention (FDP) solutions in 2023. The bulk of this spending growth in 2023 is likely to be driven by financial institutions and payment service providers, rather than by retailers. The study predicts that this is largely due to a heightened awareness of FDP benefits among the digital payments providers.
Not only has VoPay, a leading digital payments solution, invested in cybersecurity, but we also lessen the risk of credit card fraud, CNP fraud, and even identity theft. Here’s how: unlike traditional bank account payments, VoPay generates and shares a token, not a bank account or credit card information, between a consumer and a merchant.
This allows for increased security and privacy for both the consumer and the merchant. For the merchant and institutions, VoPay’s risk intelligence software is designed to automatically and proactively prevent payment fraud.