Why IP Information Is a Top-Five Fraud-Prevention Tool for Retail
Global ecommerce sales are predicted to reach $2.05 trillion in 2016, and are further estimated to grow to $3.58 trillion in 2019, according to eMarketer. A downside to this explosive growth is the increased opportunity for online fraud.
In the United States, the percent of revenues retailers lost to fraud is up 11 percent over last year (2015), from 1.32 percent to 1.47 percent.
Not only does the actual fraud hurt, but making inadvertently wrong decisions to avoid fraud costs also impacts merchants. Up to 25 percent of declined sales transactions for ecommerce merchants were actually good sales to start. Fraud tests are known to have huge rates of false positives. Online retailers are definitely paying a price in turning away more legitimate customers and manually reviewing more orders, according to a report from online fraud-prevention company CyberSource Corp., part of Visa Inc. Forty-six percent of retailers said the cost of personnel who conduct manual reviews represented the largest share of their fraud-prevention budgets.
These are substantial numbers, yet careful management of the authentication process and deployment of the right tools can yield significant results in terms of online fraud reduction.
The greatest threats for digital merchants are: Clean fraud, ID theft, friendly fraud, phishing and botnets. The NetAcuity IP Intelligence and geolocation solution delivers technology that can lift the cloak of the fraudsters and expose their anonymity.
Building smarter rules around fraud detection and automating the process is proven to increase detection rates, reduce false positives and improve the shopping experience. IP Intelligence and geolocation technology can be used to automatically block suspect traffic, request verification (via email or SMS), or flag suspect activity for further internal review.
Geography is only part of the fraud-detection landscape. Smart merchants take IP geolocation further than just location, by using advanced intelligence parameters to identify proxies, Virtual Private Networks (VPNs), anonymisers, tors, mobile devices, Internet Service Providers (ISPs), domains and hosting centers. By using more than just geography data, retailers can identify greater numbers of suspicious online connections.
The critical points of any authentication or payments system are during sign up, login, purchase, funds deposit or withdrawal.
Ideally, you should continually check the IP address at every stage of the purchase process to ensure the session has not been hijacked.
Understanding where and how visitors connect to a site can result in more accepted orders, less false positives and reduced fraud. Automation is key. IP Intelligence and geolocation technology provides a simple one-source solution to enable digital businesses to reduce fraudulent activity by as much as 90 percent.
In fact, 51 percent of merchants are currently using IP geolocation information as one layer of fraud prevention, with another 13 percent planning to add it.
Get more details on why IP Intelligence and geolocation technology is one of the top-five techniques to detect and prevent online fraud.