Like all forms of payment, mobile transactions have the possibility of being fraudulent. With mobile payments becoming more frequently used, merchants need to be on guard to prevent fraud from occurring as best as possible. According to data collected from Kount, mobile transactions globally will reach almost three quarters of a trillion dollars by the year 2017.
One major reason why mobile payments can be fraudulent is due to the consumer. Approximately 34 percent of consumers do not lock their smartphones, and for those that do, 62 percent use a weak passcode, such as 4-3-2-1 and 34 percent use a four digit-screen lock.
Kount’s research showed that in 2014, mobile generated $3.34 in hidden costs towards every dollar of fraud. In comparison, online fraud only had a hidden cost of $2.62 towards every dollar of fraud. Fraudsters expose mobile information within online marketplaces, where they sell this confidential information for cheap. Within the U.S., credit card data can be sold for as little as $1-5, identities are sold from $14-18, and online banking account details sold for around $300.
So how can merchants prevent mobile payment fraud and be prepared? Take a look at these 8 tips according to Kount and PYMNTS.com.
- Evaluate if your business has the money, time, and expertise to create its own preventative fraud solution.
- Coordinate “fraud audits” every 12-18 months that contain evaluations for mobile fraud prevention.
- Be sure to identify if a mobile device is being used during a transaction, and if so, if the consumer is using a mobile browser or mobile app.
- Know what kind of mobile device is being used, as not every mobile device has the same fraud profiles.
- Identify if the phone number that is used is a forwarded number. Fraudsters forward a customer’s phone calls to their own phone.
- Locate the actual location of the mobile device. Mobile devices rely on proxy IP addresses or connect via carrier network IPs. If you don’t have the capability to collect location data, fraudsters have a greater probability to disguise their activity.
- Know if a card-present or card-not-present transaction was done. Mobile POS systems give fraudsters the chance to obtain debit/credit information.
- Notice if other transactions are related to the device. This ability is called “order linking” and can disclose if a mobile device used in a transaction has been linked with previous fraudulent behavior.
Mobile payments could very well become a main form of payment in the near future. Merchants need to be on the lookout for fraudulent activity and become informed on the latest security techniques so they can combat mobile fraud. Following the above tips will help merchants prepare, identify, and fight mobile payment fraud.