The use of smartphones for B2C transactions has grown exponentially, and it’s been amazing to see mobile’s growing role in the percentage of card-not-present (CNP) transactions. Unfortunately, a growing number of mobile transactions has shown a larger number of fraud via phone. Let’s take a look at the state of mobile fraud and see what we can learn from this relatively new trend in e-commerce.
Risk experts estimate that up to 14% of CNP transactions originated from a mobile phone in 2014. This is a great sign of adoption, which is no surprise given the fact that it’s such a convenient method for consumers. But the merchant community is still adjusting to the new “mobile first” world of consumer-buying behaviors. The biggest adjustment for merchants is in regards to mobile fraud. The percentage of mobile transactions that turn out to be fraud is much higher than more traditional CNP transactions—recent studies by both Fraud Practice and LexisNexis found that it’s nearly double. Given these figures, it’s likely that this higher percentage of fraud via mobile channels will continue to grow until merchants develop mobile-specific fraud prevention techniques.
But mobile fraud isn’t just limiting itself to the e-commerce arena. Now mobile phones are being used to commit fraud in brick-and-mortar stores, too. With the advent Apple Pay, the criminals who once were only able to use stolen credit card details for CNP transactions online, can now set up an Apple Pay account with stolen or purchased credentials. They then need only walk into a retailer, like Target, Home Depot or even an Apple store, and buy expensive products by simply holding their phone up to the terminal. Fraud experts such as Brian Krebs and Avivah Litan have both broken reports like that in recent weeks.
It’s tough to tell how Apple will fix this problem, but one thing is for certain: merchants need to put more effort into learning the true identity behind the mobile phone number. Whitepages Pro offers the best coverage of mobile phone data in the U.S. Armed with our data, you can better identity fraud before you approve purchases and speed good orders to clear. To learn more about how we can help your e-commerce business, read our Identity Check data sheet.