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How to Stop Fraud — and False Positives — from Harming Retail Sales

Blog Post03/30/2018
Business Fraud and Identity Management
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TransUnion’s IDVision solution keeps e-commerce and retail companies steps ahead of clever criminals

The number of U.S. identity fraud victims reached a record high of 16.7 million consumers last year, a 1.3 million increase over 2016 that triggered losses of $16.8 billion, according to the 2018 Identity Fraud Study by Javelin Strategy & Research. And that's just the tip of the iceberg.

Javelin’s study also uncovered the number of account takeovers — where thieves used stolen login credentials to access a consumer’s accounts — hit a four-year high with losses that surged 120% in 12 months to $5.1 billion. The cost of application fraud, in which information stolen in a hack is used to open new credit card accounts, is expected to hit $2.1 billion by 2020.

The biggest fraud-related risks for companies and consumers in 2018

E-commerce and phone transactions pose the greatest risk to companies and consumers, with fraud 81% more likely to occur during “card-not-present” sales than at brick-and-mortar stores, the Javelin study said.

But there’s another disturbing dilemma for retail and e-commerce companies: About 30% of transactions declined due to suspected fraud are legitimate, reports And a hefty $118 billion is left on the table every year due to wrongful rejections, according to Javelin’s Future-Proofing Card Authorization study.

These “false positives” not only result in lost sales, but often send insulted customers running straight to the competition – without much chance of returning.

Better fraud prevention technology can have a direct impact on your bottom line

Shifting demands and requirements have also increased the need for strong fraud controls that simultaneously address consumer concerns surrounding the privacy of personal data and their demand for seamless digital experiences.

Companies not evolving with today’s high-tech times pay a high price, including lost customers, attrition, and back-office expenses.

In response to these challenges, TransUnion has launched a solution for companies struggling to strike a balance between shutting down increasingly sophisticated fraudsters and offering seamless online transactions for consumers.

IDVision is TransUnion’s powerful fraud prevention suite of solutions for e-commerce and retail businesses

TransUnion’s IDVision was created to provide businesses with a holistic approach to fraud and identity management. Its suite of solutions was carefully designed to restore confidence in conducting business by mitigating instances of fraud and identity theft in real time.

IDVision gives users a competitive edge by helping detect hard-to-catch fraudsters at the earliest opportunity while also increasing customer satisfaction with smooth and streamlined online experiences. It can also significantly reduce back-office expenses by decreasing the need for lengthy manual reviews that leave consumers disgruntled.

“As fraud evolves and becomes more sophisticated, the legacy systems many businesses have in place are not sufficient to detect today’s fraudsters,” explains Chris Cartwright, President of TransUnion’s U.S. Information Services. “We developed IDVision to provide greater certainty now and as fraud evolves, while still meeting the expectations of speed and uninterrupted consumer experience our customers need.”

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High-quality data distinguishes IDVision from the competition

IDVision combines TransUnion’s substantial data assets with advanced analytics technology that links, interprets and analyzes information to uncover anomalies and patterns of risk. Users receive actionable alerts with instant scores so they can make better, faster verification decisions and take action before losses occur.

Armed with these results, businesses across many industries can significantly decrease false positives by obtaining a more comprehensive picture of genuine consumers, including their digital behavior and transactions. Companies can also protect consumers by detecting more fraud patterns at origination, during transactions and by monitoring portfolios.

How IDVision helps protect e-commerce and retail companies from fraudulent activity

TransUnion’s IDVision stands out from other fraud and identity theft management solutions not just because of the quality of data it relies on, but because it provides a variety of tools necessary to prevent losses in a single suite. Its capabilities include:

  • Identity verification and authentication which helps companies determine if people are who they say they are at the point of origination.
  • A digital verification tool that detects if an associated device, digital footprint or online behavior is suspect, and sends instant alerts if the information raises red flags.
  • A synthetic fraud model which detects whether an identity may be fabricated or manipulated to hide fraudulent behavior.
  • The first-to-market Fraud Prevention Exchange which detects in real time if devices or identity elements have been associated with high-velocity credit applications or reported fraudulent behaviors across TransUnion’s expansive network of customers.
  • The TLOxp® interface which quickly helps verify information on consumers and devices. This manual review solution allows companies to make faster, better-informed decisions about transactions.

How IDVision creates better experiences for customers

Consumers are increasingly choosing to do business through online channels, and they expect a high standard of speed and responsiveness. This is reflected in e-commerce shopping cart abandonment rates which average about 69%, according to studies compiled by the Baymard Institute, an e-commerce research firm.

Security verifications can play a significant role in legitimate consumers walking away from potential purchases; Baymard estimates that 28% of carts were abandoned because of a checkout process that was “too long or complicated”.

IDVision combats this statistic by enabling security checks to be enacted in the background so companies don’t have to choose between genuine transactions and an exceptional customer experience.

It also delivers a superior customer experience by helping to reduce false positives, protect consumers from fraudulent behaviors, reduce the need for manual reviews that slow transactions, all while using machine learning to stay ahead of sophisticated fraudsters, and enabling companies to approve transactions with confidence and minimal friction.

IDVision from TransUnion lets you sell with confidence

While most identity management solutions focus on linking supplied information to an identity, they struggle to determine if the identity is compromised, fraudulent or even real. IDVision takes this vital extra step, arming companies with a suite of solutions that offer a smooth customer experience while protecting the bottom line.

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