SMBs: Protecting Against Online Fraud Right Now
With more companies being forced to sell and advertise online because of sheltering in place orders, NS8’s Don McCoole, Sr. Director of Solutions Consulting and Client Success. shares insights on which types of businesses are currently at the most risk and recommends how they can protect themselves.
1. Which SMBs are at the highest risk of cyber fraud and what can they do about it?
For starters, those businesses that lack a fraud solution or dedicated fraud partner are inherently at the most risk to protect themselves against online fraud. Many fraudsters deploy sophisticated tactics to commit fraud that aren’t easy to detect, so going at it alone is never recommended.
Also, with many teams now separated by remote work, not to mention suffering from depleted staffing levels, it’s not a reasonable expectation for any business to be able to manually screen every order. Therefore, having a solution that can automate large portions of a company’s fraud management is essential. That, combined with the ability to add extra levels of friction and verification for grey area transactions, is the best course to take.
At this particular point in time, with so much business shifting online, almost all businesses are now at an increased risk of fraud attacks. Much like we see during holiday shopping periods, more instances of fraud coincide with an increase in eCommerce and online transactions.
Every business can benefit from a solution that scores online users and transactions. Real-time, automated technologies allow companies to fight fraud more effectively because they support a proactive strategy that doesn’t need to wait for manual input to adapt. Those solutions that rely on AI, machine learning, and predictive analytics provide the greatest protections because they offer deeper levels of analysis that go beyond just scrutiny of payments.
2. What will advertising fraud look like in 2020?
There are several different types of ad fraud schemes that digital marketers need to always be wary of. Click fraud, impression fraud, and retargeting fraud are all constant threats that can quickly sap advertising budgets. Each type of ad fraud has a different scheme associated with it. These include pixel stuffing, click farms, ad stacking, domain spoofing, and more. It can be very difficult to keep up and understand exactly how digital marketing money can get stolen.
All schemes operate with the same basic idea, however: Fraudsters insert bots or spoofed information somewhere in customers’ digital advertising journey to generate revenue for themselves and use up other businesses’ advertising resources.
Looking forward, we will likely see a rise in fraud for audio formats as programmatic audio advertising begins to be used more often in digital radio, podcasts, and music-streaming services. We may also see a rise in sophisticated bots as more people opt-out of sharing data and fraud attempts to fill that space with high-value targets. New forms of affiliate fraud will probably continue to appear as companies focus on diversifying and creating omnichannel sales.
3. How can SMBs minimize the impact of order fraud right now?
With global economies hurting and more retail sales shifting online, businesses need to fight any tendency to approve more suspect or questionable orders just because times are tight. Some companies may be scrambling for every online sale that they can get, and approve more orders, so they may be relaxing their fraud standards. Orders that might typically be flagged for manual review or put through secondary verification steps are now being approved to preserve revenue in an uncertain marketplace. This is dangerous and can lead to chargebacks and greater losses, than if an order was canceled in the first place.
Some steps can be taken to best prepare for a potential increase in chargebacks, and it comes down to collecting information about purchase and delivery. The more information a merchant can provide in any dispute, the harder it is for fraud to occur.
First, they should collect as much customer data as they can during checkout and make sure that it is easily accessible, including order history, delivery methods, and dates. Also, have tracking and shipping processes in place that allow for verification that the customer did receive the order. A simple signature is also a valuable part of the paper trail that can prove the product was ordered and delivered.
Stringent verification and authentication solutions are always prudent safeguards . Adding verification steps into the customer experience will deter a lot of fraudsters who will move on to easier prey, and make real customers feel like their brand is more secure. In these times, when merchants may elect to increase their risk appetite, they must remain diligent and protect against disputes and the unwanted penalties that typically follow with increased chargebacks.
4. How can SMBs minimize the impact of advertising fraud right now?
First, advertisers need to be able to measure the performance of their ad campaigns by determining and tracking which metrics are the most important to them. Higher numbers of revenues and conversions are often good indicators of campaign success, as long as they aren’t also leading to high levels of chargebacks. Much like protecting against order fraud, a mix of manual and automated review for ad campaigns assessment can prove very effective.
Ad fraud can first be minimized by examining the performance of past campaigns, where marketers look for visitation patterns that may indicate bot activity, conversion rates that don’t match traffic spikes, and high numbers of fraudulent orders. Setting up customized reports with an analytics platform is a good way to review campaigns for chargebacks and fraudulent orders and ensure that no campaigns are being overpowered by bad traffic.
Automated solutions exist to help merchants score their campaign traffic, pinpoint fraud using behavioral analytics, or sometimes even block bots from campaigns entirely. With the right software, businesses can see when campaigns are reaching real customers and determine which campaigns are most successful at converting real sales.
5. Tell us a little bit about NS8 and how your company helps merchants.
By utilizing our platform’s behavioral analytics and real-time user scoring, merchants can minimize risk and automate fraud management more effectively by building processes and workflows designed for their unique needs.
What sets us apart from our competitors is that we score actions earlier. We don’t just review payment information and user behavior. We also include pre-session data and identify how users came to the site, which allows for deeper fraud analysis.
Additionally, other fraud solutions require a waiting period to gather data or require extensive development time, but we built our software to be implemented quickly, so merchants can solve fraud issues immediately. And by offering integrations for e-commerce platforms, our solutions are available to small to medium-size businesses, not just enterprise-level companies.
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