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As retailers leverage online shopping options for busy customers this holiday season, they’re finding that industry-wide, sales are up (and continuing to rise), and the industry is expected to exceed $6 trillion in sales this year.
Across all shopping channels, from in person, to picking up in-store, to ordering something online if it’s not available in-store, this momentum emerges as brands prepare for the always-competitive holiday shopping season. But to maximize their profit potential and ensure shoppers have unparalleled experiences, they still need to navigate one pernicious problem: fraud.
For brands engaging with consumers in any digital interaction, fraud is a constant, and proves to be constantly worsening. What’s more, it’s costing the industry a staggering amount, exceeding $48 billion last year.
GBG IDology’s latest fraud report identified and analyzed the latest global fraud trends so retail brands can prepare for the height of when attacks can peak.
Here are the top fraud trends that companies should stay focused on preventing this holiday season to build consumer trust and drive profits.
Gen AI Introduces New Fraud Risks
Less than two years after Open AI introduced ChatGPT and unleashed a generative artificial intelligence boom, more than half of Americans have used the technology, exploring its potential to instantaneously produce human-like text, realistic images, and uncanny audio samples.
It’s also powering new forms of fraud and making existing methodologies more effective. Case in point, our recent survey found that online retail businesses ranked Gen AI as the most significant trend in identity verification over the next three years to five years.
Most notably, more than half of those businesses are concerned about Gen AI’s potential ability to create more convincing synthetic identities.
Mobile Remains a Top Target
Many modern shoppers are mobile-first, with 60 percent of U.S. adults saying that “mobile shopping is a necessity” for convenient buying experiences. Mobile is also becoming an attack vector for fraudsters.
Notably, 53 percent of online retail businesses saw the volume of fraudulent activity in their mobile channel increase or stay the same over the past 12 months.
Specifically, device cloning and ANI spoofing/caller ID spoofing was the mobile-based fraud technique these businesses believe is most prevalent in the industry. In these cases, fraudsters replicate a device’s identity or manipulate caller information to deceive recipients and gain unauthorized access to account information.
When successful, these attacks allow fraudsters to impersonate legitimate users, commit identity theft, complete unauthorized transactions, and bypass security measures. This allows them to commit even more egregious and costly forms of fraud. Given the popularity of mobile with consumers and fraudsters, implementing fraud prevention strategies during the holiday shopping season is essential.
Contact Center and In-Person Channels
While the focus on digital fraud continues, contact centers and in-person channels can’t be ignored.
Half of the businesses surveyed in the recent fraud report saw increased fraudulent activity at their contact center in the past year. With deception already the most prevalent fraud technique, retail brands must account for the emerging capabilities of Gen AI that could exacerbate these challenges.
An interconnected system of online and offline channels and a holistic, multilayered approach to identity verification is essential to combat this. A unified, modern platform equipped with advanced authentication techniques and configurable workflows enables retailers to design customer journeys that incorporate digital and in-person channels.
Start Preparing Now
Today’s retailers must meet the consumer demand to offer different shopping experiences, from in-store Black Friday incentives, to online Cyber Monday deals, to a hybrid between the two of ordering online but picking up in-store. Mastering the omnichannel shopping experience will empower retailers to build trust with new and returning customers.
Shopping online will remain a convenient place for millions of people this holiday season. In order to drive repeat buyers, as well as profits, brands must be not only aware of current threats but already anticipating the next potential identity theft or cyber attack that could hit their platform.
By taking a strategic approach, brands can successfully combat fraud and eliminate the risk of losing customer trust and damaging their reputation, ultimately impacting sales and long-term growth.
James Bruni is the managing director at GBG IDology, an industry leader in identity verification, AML/KYC compliance, and fraud management solutions that help businesses establish trust, drive revenue, and deter fraud.
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