Preventing Transaction Fraud in eCommerce

All kinds of eCommerce fraud have been on the rise in the last five to ten years. There’s no denying that as transactions have moved partially or fully online over time, fraudsters have jumped in to take advantage. One study from Signal Sciences in 2019 found that eCommerce retailers deal with an average of 206,000 web attacks per month. However, since the COVID-19 pandemic, most transactions have been forced very quickly into the online realm. All of the commotion that this has created for both consumers and retailers has left many vulnerable to fraudulent activity. According to Markets and Markets, the post-COVID-19 global fraud detection and prevention (FDP) market size is expected to grow by $17.3 billion by 2025. 

With more customers and retailers using online platforms for shopping than ever before, many customers that have been previously unfamiliar with online fraud are now being exposed to it for the first time. Some estimates say that nearly 500 million customers who had never completed an online transaction before did so for the first time in 2020. They simply aren’t prepared for the kind of fraudulent schemes that are out there. Retailers on the other hand have a different problem, typically. The issue that many retailers are having is that they are still relying on basic or outdated identity verification methods.

Why is eCommerce Fraud Prevention Important?

When we think of reasons to implement fraud prevention and identity verification, the first thing that probably comes to mind is saving money, but there’s more to it than that. ECommerce fraud puts a hindrance on the customer’s experience (to say the least) when they are the victim even if the retailer is able to reimburse them. It hurts the customer’s view of the company if their data is misused through the retailer or if fraudulent purchases are made through them on the customer’s behalf.

ECommerce fraud prevention is important for the company’s bottom line and reputation as well as the security of the customer experience. Additionally, KYC or “Know Your Customer” compliance is always a concern for any business that isn’t looking for fees or reprimands from the federal government.

On a positive note, having the ability through an online ID check to onboard and do business with people that might not have been able to come to you in person means that you have just expanded your customer base. Anyone almost anywhere can get access to your products and you can use online ID verification to be sure that they are who they say they are. And because the process is so fast and easy, transactions won’t take as much time for you or your customers leaving them satisfied and you to move on to the next transaction.

How to Prevent ECommerce Fraud with Identity Verification

IDScan.net has identity verification solutions that can make eCommerce fraud prevention simple for both your company and your customers. Many fraud prevention and identity verification solutions are not intuitive for customers, the long processing times can lead to losing the transaction altogether. Customers want a streamlined experience when making purchases and you want to ensure that the transactions are legitimate. That’s where IDScan.net’s Document Verification System (DVS) comes in. The customer takes 3 images of their identification document: 

  1. Front of the ID
  2. Back of the ID and
  3. A selfie

The automation performs identity verification by checking that the ID is formatted correctly on the front and back. It also checks that the information in the barcode matches what is displayed on the front of the ID. It then queries the USPS database to confirm that the address on the ID exists. Lastly, it moves to the pictures, calculating a confidence percentage in facial match between the photo on the ID and the selfie supplied by the customer. The selfie is run through anti-spoofing processes to assure it is legitimate. 

The customer’s picture is first compared to a database of known faces to ensure that a human face is indeed pictured. A complex algorithm then maps the customer’s face and compares the unique layout of the pictured face to the face on the ID provided. The ID verification automation can then see more definitively whether or not the faces match and provides a percentage to represent the confidence it has in the faces being the same.

Additionally, our identity verification software has the ability to handle many document types including driver’s licenses, passports, passport cards, green cards, and international documents with an MRZ (Machine Readable Zone). It’s also easily integrated into your existing system so there’s no need to worry about complicated setup.

FAQ:

Why is eCommerce Fraud Prevention Important?

ECommerce fraud prevention is important for the company’s bottom line and reputation as well as the security of the customer experience. Additionally, KYC or “Know Your Customer” compliance is always a concern for any business that isn’t looking for fees or reprimands from the federal government.

How can we prevent eCommerce fraud with identity verification?

IDScan.net’s Document Verification System uses three photos of the customer and their ID to verify that both the customer and the identification document are legitimate.

What document types can our Document Verification System verify?

Our Document Verification System can verify driver’s licenses, passports, passport cards, green cards, and international documents with an MRZ (Machine Readable Zone)