Worldwide Internet connectivity continues to grow at an explosive rate. The telecommunications industry is expanding the global network of cellular, fiber, satellite and even peer-to-peer technologies at a blistering pace. This convergence is opening new corridors of connectivity and thus business opportunities across the planet. As internet commerce grows, *projected to be nearly $350 billion worldwide by 2015, so do the opportunities for fraud. Online fraud accounted for over $11 billion worth of transactions in 2012 and has increased again for a third straight year. Even more troubling for businesses is that the percentage of revenue lost to fraud is rising (increasing from 0.51% in 2013 to 0.68% in 2014, according to a recent Lexis Nexis report). This is a problem that can be successfully mitigated, if not completely prevented.
About Online Fraud
Online fraud is usually a result of security breaches online or at physical points of sale; the Target and Home Depot compromises are a prominent examples of this. Unfortunately, since card networks are vulnerable to being exposed at any point in time, causing sensitive information to be leaked, businesses that accept cards online have to contend with a relentlessly growing onslaught of fraud attempts every day. The identity theft epidemic stems from fraudsters buying information sometimes even purchasing bulk sets of complete identities illegally. Attackers are armed with more data than ever. The increase in internet coverage in developing nations, faster and easier payment methods, VPNs and proxy services, along with identity protection tools like Tor have all helped spur online fraud growth. Using these tools, fraudsters have identified most e-commerce websites easy targets, and the resulting consequences for merchants worldwide have been astounding. Issuing banks, merchants, and cardholders are all impacted. The hidden costs associated with online fraud are untold. Customers can be left unable to purchase while identity issues are resolved. Merchants end up absorbing upwards of $2.50 per every $1 in fraud, and that does not include the opportunity cost or brand damage incurred. Issuing banks are losing too, having to allocate resources for support, paying to have new cards issued to customers, and at times having to absorb the loss themselves.
How It Can Be Mitigated
Telo has developed a product that empowers businesses to confirm their customers’ identities thus mitigating instances of fraud related to identity theft. EveryoneAPI is a powerful tool in the war against fraudsters. By obtaining authoritative information about the telephone number provided during a transaction from EveryoneAPI, merchants are free to implement an authentication process for that number. Transaction information such as name and address can be successfully matched with the phone data received from EveryoneAPI. Once information is confirmed and the customer authenticates the phone number via SMS or voice, the business can dramatically increase the likelihood that the purchase is not fraudulent.
Find Out How to Stop Fraud
To find out more about card not present fraud (CNP fraud) and learn how your business can successfully mitigate it, read our fraud mitigation whitepaper or contact us at 1-888-315-TELO (8356) for a free consultation.