New shopping habits create new fraud risks

NEW YORK — The COVID-19 pandemic has disrupted the global economy and changed consumers’ shopping habits. What hasn’t changed is opportunities for fraud, according to a report from LexisNexis Risk Solutions, which found that one doesn’t have to be technologically naive to be a victim.

Last year overall market and economic uncertainty due to COVID-19 significantly increased successful fraud attempts, according to the report. This is especially true for the e-commerce, retail, financial services and lending sectors. LexisNexis Risk Solutions expects the trend to continue in 2021. While professional fraudsters are always ready to attack, economic hardships can also induce others to engage in fraudulent activities. These can be individuals with no criminal behavior history. Typically, organizations are more sensitive to customer friction during slower economic periods and more concerned about lost opportunities. That does not mean they can let their guard down. In addition to those who attack with intent, consumer stress and fear can lead consumers to riskier transaction behaviors, which may increase successful tactics for malware infection on devices and theft of personal identification information. This presents more opportunities for fraudsters leading to more attacks.

Businesses must use both physical and digital identity data to get a full view of their customers to effectively fight emerging fraud attacks. They should also utilize multiple layers of fraud defense like actionable decision analytics and investigation tools. This, coupled with integrating their digital customer experience and cybersecurity strategies, will protect the relationships that businesses have with their customers and their information.

“Businesses can no longer use a check-the-box, incremental approach towards addressing these challenges and trends one at a time because fraud always evolves,” said Kimberly Sutherland, vice president, fraud and identity management strategy at LexisNexis Risk Solutions. “These factors feed on each other and require an integrated and holistic approach to detecting, assessing and mitigating fraud risks moving forward. 2021 will likely be another challenging year for the world in many ways, but organizations can and should make sure they take a comprehensive view of their customers so that they can effectively fight fraud.”

The infographic below details trends retailers should be aware of. More information is available here.