Fraud is a massive drain on resources for many online companies. Ecommerce sites, social networks and advertisers are all worried about bot fraud, ad fraud and payment fraud, as these issues continue to undermine online efforts. However, social and ecommerce sites could work together to curtail fraud by making more use of social logins and social data in general.
A report from payment processing company Worldpay explores how social could be a powerful tool for identity verification and fraud prevention. A key part of using social media data is to establish identity online. Many are already using sites like Facebook, Google+ and Linkedin as identity services.
60 percent of the 200 merchants surveyed already use social data in their review processes. However, much of this involves ad-hoc or manual processes. 52 percent said they were ready to make better use of the data but lacked the knowledge to do so.
Social logins help automate the identity service somewhat, and 35 percent of respondents already use social as part of their customer login process. 56 percent also said they place greater trust in customers who use social logins. However, business should be careful not to become complacent; screening these profiles for validity during a fraud investigation would be essential.
One respondent told Worldpay that businesses aren’t using the data they collect effectively:
There is a lot more that could be used to detect a bad purchase, (Often) the information is all there, and I could have told you it would result in a chargeback, but we did not have the data points.
58 percent of respondents admitted to collecting data they don’t use in fraud-prevention efforts, and 85 percent agreed that they need greater insight into their data if they are to fight fraud. One big way to leverage this data is to automate its collection and examination. Respondents noted that unexpected information and trends can be surfaced by intelligent software, leading to predictions of fraudulent intent.
93 percent of respondents said they constantly plan ahead and make use of the latest technologies in an attempt to prevent ever more complicated scams and fraud attempts. There is still turmoil in the market, and while social data and social logins could help, there’s still a long way to go before a bulletproof solution emerges. Going forward, automation and centralization are likely to be key aspects of fraud strategy. Worldpay said:
We predict more and more use of social identity as a valid means of establishing trust in a transaction, whether this transaction is peer-to-peer or a more conventional merchant-purchaser interaction. All this poses new risks particularly around the hijacking of identity. Players in the industry are already responding to the need for robust management of online identity by creating centralised repositories of digital identity information.
Download the full report for more details, data and recommendations.
Image courtesy of Shutterstock.