What are the Leading Consumer Fraud Prevention Trends for 2023?
It’s the start of a brand-new year. With that, comes new opportunities. While many merchants are still feeling the ups and downs of 2022 (think supply chain woes, inflation, data breaches, et al.), it’s time to look ahead. We’re setting precedents for 2023, beginning with fraud detection and prevention.
It’s no longer enough to rely on one program or platform to process customer authentication nor safeguard internal systems strictly through a POS or CRM. Cybersecurity is going to be more important than ever in 2023.
To insulate your business against modern fraud threats in 2023, shift focus to:
Trend #1: Future-Proof Your Customer Experience
Very few merchants are eager to upset the apple cart by placing too much focus on customer verification and credit authentication before a sale is finalized. But, while false negatives and abandoned carts aren’t ideal for anyone, the need to balance user experience with fraud prevention is absolutely critical.
Unfortunately, that perfect balance between technology and customer satisfaction isn’t quite ready yet, leaving merchants to make up much of the difference as they go. However, user experience is a priority in the tech sector, and you can expect better, more streamlined software… eventually.
In the meantime, there are a few precautions you can take now to prepare the way forward:
Embrace Multi-Factor Authentication
MFA is in no way a perfect solution for a balanced approach to fraud. It does provide a necessary additional layer of protection for you and your customers, though. Passwords alone are no longer sufficient to stop every fraud attempt, and although you may not want to “annoy” your customers, it’s better to be safe than sorry.
Training is Key
It’s imperative for merchants to be aware that every single person in their company is a potential target for fraud. Therefore, security awareness and training is an essential element for every business in a professional vertical, from trainees to executives. Remember, Facebook was the victim of a data breach that exposed 533 million users in 2021. Don’t wait… train now.
Make Security Awareness a Company Motto
Keep in mind 82% of breaches against businesses in 2022 were sourced by human errors related to phishing or other forms of social engineering. With the proper training mentioned above, in combination with an overall company policy of awareness and learning, employees can be encouraged to consistently recognize security issues and immediately respond according to protocol.
Trend #2: (Cautiously) Deploy Biometrics
Listen: we’re not going to tell say that biometrics aren’t the future of security. It’s definitely true that biometrics comprise sophisticated technology that should be much more difficult for fraudsters to game. However, fraudsters can gain access to this data and use it to impersonate legitimate users. Frankly, the implications of deep fake technology aren’t even fully factored yet.
This is why we always recommend merchants use more than one verification tool at a time. While a fraudster may be able to bypass one, it is very unlikely that they could bypass them all. This is why a multifaceted approach to cybersecurity is so important.
One can implement this strategy by:
- Using MFA fraud tools in tandem with biometrics (AVS, CVV, Geolocation, and proxy piercing)
- Implementing security questions or 2-factor authentication
- Considering limiting logins or purchases made via a VPN
Trend #3: Communicate With Customers
Merchants should consider communicating concerns about cart abandonment to customers. Tweaking terms of service and providing customers with a form to elect to read them before checkout can go a long way toward preventing a negative customer experience.
Increasing one’s security measures is meant to protect those same customers from nefarious actors and cybercriminals. A little communication on this score can alleviate some of that friction.
Merchants can’t make everyone happy, no matter what they do. Some consumers will continue to abandon carts and increase churn.
Ultimately, one has to do what’s best for their business and customers. In this case, increasing security measures is the right thing to do for 2023. Loyal customers will appreciate these efforts, and new customers will appreciate the candor.