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Retailers need to strengthen fraud defenses

Glen Goldstein
Blog Post02/28/2018
Identity Protection
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The 2017 holiday shopping season was one for the history books. U.S. retail shoppers spent a record-breaking $800 billion, with online sales rising 18.1% over the 2016 season, according to MasterCard’s Spending Pulse retail report[1]. And Adobe Digital Insights reported[2] that 47.4% of e-commerce visits during the Black Friday weekend came from mobile devices.

While 2017 may have been a record-breaking year for U.S. e-commerce, it was also hit hard by data breaches. “Last year saw more than 1,000 data breaches in the U.S. alone, making it the country most affected in terms of both number of occurrences and total identities stolen,” says Glen Goldstein, senior vice president of technology, retail and e-commerce at TransUnion, a global risk information provider. “That means it’s more important than ever that retailers have a strong fraud-prevention strategy in place.”

While many retailers have traditionally relied on simple identity verification tools to prevent fraud, Goldstein says, as the incidents of fraud increases along with the sophistication of fraudsters, that is no longer enough. “E-commerce companies must have a digital and device verification layer alongside their identity verification tools to sufficiently manage fraud.”

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Digital verification analyzes a consumer’s behavior on a website or mobile app. It compares a shopper’s interactions to normal browsing behavior patterns to identify potential fraud. It also examines hundreds of attributes on the device itself, such as system settings to identify jail-broken phones, and understands where a device is truly located compared to where the device should reasonably be—helping detect potentially fraudulent transactions a retailer might otherwise miss, Goldstein says.

“Many retailers realize they must adopt these types of next-generation tools that can counter fast-changing fraud patterns with speed and scale,” Goldstein says. “Machine learning can help retailers analyze thousands of data points to detect potential anomalies and allow for real-time model updates that can improve risk scoring.”


Internet Retailer Feb '18 Cover Image


This article originally appeared in the Internet Retailer magazine February 2018 edition.


[1] MasterCard Spending Pulse retail report (as cited in Reuters, “U.S. department store stocks jump on holiday spending record”, Dec. 26, 2017)

[2] Adobe Digital Insights, (press release) “Adobe Data Shows Cyber Monday Is Largest Online Sales Day in History with $6.59 Billion”, Nov. 27, 2017

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