Tracking down the identity thief

These days, 7.5% of the entire volume of retail trade in Switzerland is generated over the internet. Most turnover is reported in the areas of home electronics and fashion. According to the 2015 “ibi research” study, more than four out of every five traders have already fallen victim to an instance of fraud or have come into contact with an attempt at fraud. For more than half the traders, the number of cases of fraud has grown over the past five years, and over half of the surveyed traders also expect the attempts at fraud to increase in future.

Timetables just like burglars
The risk varies, depending on the sector, the particular target group, the value of the goods and the ease with which the items can be bought and sold. Attempts at fraud are discovered more frequently in the evenings and at night. The time of year also plays a part. For example, online traders would be well advised to be more careful at Christmas in particular. There are various different ways by which fraud or fraud scenarios can lead to losses being suffered by online shops. On the one hand, for example, there are consumers who order goods on account, even though they know very well that they are not able or willing to pay for them. Other people order goods under a false name or have them sent to an address that has been manipulated. Online traders can protect themselves against such patterns of fraud by checking the identity of the customer with a business information agency during the order process and using a credit-worthiness check to weigh up whether the customer can pay on account or not. Identity theft, where personal information on a private individual is misused by third parties, is also a widespread problem, but is significantly harder to uncover. Details are conveyed to the fraudsters by a variety of routes, e.g. with the help of telephone book entries, death notices, lotteries, falsified real estate adverts or social media. Fraudsters often also obtain access data relating to the User’s account, e.g. by using Trojans, through public networks (WLAN) or by phishing, followed by changing the login data and adding other users.
One computer for multiple thefts
Fraudsters carry out transactions without the knowledge of the genuine user, then arrange for the goods to be delivered to a different address. However, the invoice is still sent to the owner of the account. Often, there are organised gangs or organisations that operate from abroad hiding behind these fraudulent activities. Worldwide, 54% of all cyber-criminal activities are undertaken via identity theft.
So how can online traders protect themselves against such fraudulent activities? As well as carrying out the identity, address and creditworthiness check, they can also use innovative new tools as an extra step to analyse the visitor’s terminal device and determine whether this equipment has been used to carry out fraudulent transactions in the past. This is useful because although fraudsters often work with different identities on the same device, they can be recognised again thanks to the fingerprint of that particular device. If this happens, the transactions can either be interrupted immediately by the online trader or the delivery of the goods can be halted.
Work for the specialists
Another effective protection against fraud is offered by transaction analysis. This involves a comparison of the quality of the shopping basket, ordering and delivery address, e-mail addresses, customer and payment details against known patterns of fraud. The more links and factors there are between the individual parameters, the more probable it is that an attempt at fraud is being made. This attempt can therefore be recognised and stopped at an early stage. Another alternative is to outsource the fraud prevention function to an experienced service provider, who will have the necessary expertise and be able to provide the trader with professional support. Thanks to the high number of monitored transactions, the specialists can use algorithms and their own observational skills to better recognise patterns of fraud. The combination of these two elements makes it possible to constantly improve the process and increase the rate of success.
The growth in the volumes of online trade means that we must anticipate an increase in the number of attempts at fraud. In addition to carrying out a credit check, online shop operators would also be well advised to use the efficient solutions that are already available on the market to protect themselves against payment default and fraud.