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Beating the fraudster

Fraudulent transactions are a major hassle for airlines and cost the industry billions. Ian Putzger looks at the possible solutions for fraud prevention and mitigation

Notwithstanding advances in prevention and mitigation tools, fraud is on the rise globally. One major source of this is the rising tide of online purchases, which has presented criminals with a cornucopia of opportunities to hijack consumers' financial and credit card details.


David Britton, Vice-President, Industry Solutions, Global Fraud and ID at Experian, notes that the amount of stolen data has risen dramatically over the past two years, with more than 2.2 billion consumer records compromised. "The opportunity for fraudsters to impersonate consumers is at an all-time high," he warns.


Like legitimate businesses, fraudsters use new tools and techniques and experiment where these work best. Many trickle down from gaming to retail and other sectors, notes Don Bush, Vice-President of Marketing at Kount.


The aviation sector is a prime target. "No industry suffers from payment fraud quite like the airline industry. Figures from Europol suggest that fraud has cost the industry €1 billion in Europe alone," he remarks.


The possibilities are mouthwatering for fraudsters, and they are growing. As airline alliances offer air miles across all members that can be exchanged for goods and services, the opportunities for fraudsters are abundant, he adds.


The threat has increased with the rise of transactions conducted over mobile devices. To some extent, this is to be expected in light of the sheer volume of purchases made from tablets and smartphones, but there are some inherent dynamics that aggravate the problem. Keith Briscoe, Chief Marketing Officer of Ethoca, points out that the amount of fraud perpetrated through mobile channels has outpaced the growth rate in payment fraud overall.


In its Annual Fraud Benchmark Report for 2016, Cybersource notes the important differences between e-commerce and m-commerce relevant to fraud management. "If these differences aren't anticipated, a business may experience higher rates of fraud in the mobile channel than necessary or may reject or review too many genuine m-commerce transactions."


According to Bush, many businesses are woefully unprepared for this. "Mobile is such a new and disruptive type of technology; many people don't keep up with it. Nearly 40% of companies cannot detect whether a transaction is made from a mobile device, which leaves them open to fraudsters' tactics," he comments.


Companies that have outsourced the establishment of their mobile platform for the sake of a speedier entry into the market set themselves up for heightened risk, as their marketing teams, often leading the charge, are having something built outside the walls of the firm's fraud and risk management structure, he adds.


The use of mobile devices makes it imperative to extend authentication mechanisms beyond the consumer to include devices, Britton stresses. "You need management tools to authenticate the consumer plus the digital device. You have to blend together the data about the person and recognise the digital footprint of the device," he says.


The complexity is only going to increase. "I think over the next 10 years we will see a significant transition in the use of payment modes. With any of these new methods, you need to authenticate the consumer," he adds.


Already transactions are being conducted over social platforms, such as WeChat in China, which is used to stay in touch with people and pay utility bills and online purchases. This opens doors for criminals to access data and use them for fraudulent purchases, remarks Briscoe.


At the same time, alternative forms of payment keep emerging. According to Briscoe, this scene is a mixed landscape in terms of safeguards against fraud. What complicates the matter are the interfaces of payment mechanisms and devices, which may offer criminals a route to circumvent security elements. >>

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