Between Shoe addiction and Identity Fraud

Founder Miriam gives insights into her online shopping behaviour and explains the complexity behind identity fraud prevention.

What do you love to shop online? What is your favourite online shop to purchase it?
I must confess, I have a great weakness for shoes. I love to shop for shoes online, especially when I am stressed. Next to all the work, treating yourself is very important. My favourite online shops are mybudapester and breuninger. While they have everything from elegant high heels over sporty sneakers up to relaxed slippers – I was and still am a fan of the basic Converse.

What is important to you when it comes to shopping online?
A very important topic for me is data security, especially the protection of my identity. During my time in the payment industry, I got in touch with so many merchants struggling with cases of identity fraud that it became a sensitive topic to me. Now, when I leave my log-in data for e-mail accounts to address data, credit cards, bank account data, or PayPal account I want to be 100 percent sure that those are save.

Why is data security such an important topic? What are the risks?
Identity fraud occurs when personal information is stolen, such as name, date of birth, address, and other details. The risk with Identity fraud is that it happens faster than you think and can have huge consequences. Once a fraudster has your data, he can order goods on the Internet in your name or conclude contracts in your name. There are different types of fraud: Fraud in the circle of acquaintances: In this case someone abuses the identity of acquaintances, friends, and family. Fraud by petty criminals, where a lone perpetrator uses a foreign identity. And organized crime, where gangs embezzle foreign identities on a large scale. Every year there are about twelve million cases, thus occurring a financial loss in the billions. Only a small number of cases are reported to the police.

Identity Fraud poses a great risk to customers. What are the consequences for merchants?
As annoying as it is for us when we become victims of identity fraudsters, the financial loss is usually with the merchant. Next to financial abuse, in the case of identity fraud, the merchant’s customer loses trust in the online shop, which can damage the reputation and cause a decrease in sales. In the vast majority of cases, the affected parties will receive a refund, if something has gone wrong. This is why merchants should do everything they can to track down fraudsters as early as possible.

How do online merchants know that a fraudster is at work?
Different signs can help you to determine identity fraud. Large merchants, but also payment service providers like us, who protect online merchants against payment defaults, already check in real-time whether an order could be subject to fraud. Pattern recognition and plausibility checks play a major role in this.

Indications can be:
– Deviation from customer data in several orders
– Several customers with the same data
– Deliberate circumvention of the shopping basket limit
– An unusual delivery address or a suspicious ordering time

In addition, the content and the order value of a shopping cart are often revealing. Fraudsters buy certain product types such as mobile phones, game consoles, clothing, and sneakers on a large scale, sometimes also socks of a certain brand – i.e. goods that can be resold quickly and cause little storage costs. A wall unit is rather bulky. Whereby we also had a case of fraud involving a whirlpool.

What are your tips to merchants regarding data protection?
Unfortunately, there is no one hundred percent protection against identity fraud. The simplest measure against attempted fraud – not offering certain payment methods – is not an option for most merchants, because they want to address their customers. By not offering credit card payment or payment upon invoice, payment defaults are minimized, but many customers are deterred at the same time. Countless studies have shown that high number of purchase cancellations, if the customer is not offered the desired payment method.

Small and medium-sized enterprises often do not have the resources to carry out the necessary checks themselves. As a merchant, the best thing you can do to protect your customers and gain their trust is to integrate an external payment provider with great expertise in real-time risk checks, using the newest technologies like AI and ML. (Laughs) We might know somebody who could help you here.

Want to learn more about identity fraud? Read about in here on our website or contact us