Businesses use your social media information, website activity, and data from any other online platform that you may have visited to find out more about your tastes and preferences and improve their products and services so that you can buy from them. They use more than one channel to gather data. Unfortunately, this has created an opportunity for cybercriminals to infiltrate and take advantage of website security systems. A better term that describes all of this is omnichannel fraud.
What is Omnichannel Fraud?
In order to understand the definition of this word, we first have to know the meaning of the term ‘omni’, which means in all ways or places. Omnichannel refers to different ways of creating information, products or services.
This type of fraud can be described as an illegal way of acquiring funds via multiple retail and e-commerce platforms.
How Omnichannel Fraud Happens
Nowadays, it’s all about convenience. People don’t want to queue at the banks to withdraw money. They want to use their phones to do that. In addition, people don’t want to leave the house and go buy grocery. They want to buy things from the comfort of their home and have them delivered. However, customers use more than one device to access the internet and engage with businesses online.
This has prompted businesses to allow check-out and payment of goods to be made through whatever platform the customer is using. As a result, the customer can make a purchase using their tablets or smartphones. Hackers have found a way to take advantage of this convenience.
For example, they can steal a buyer’s credit card information if they make a purchase through their smartphones using public wifi. After stealing the information using one channel, the hacker uses that data to make fraudulent purchases across multiple e-commerce channels and platforms.
Types of Omnichannel Fraud
Whenever a retailer undergoes digital transformation, there are certain security risks that will arise and challenge business transactions. Below are examples of the different types of omnichannel deception that hackers use:
- Cross-channel or cross-border fraud: This is where hackers acquire wrongful credentials and sensitive information used by a victim in one channel. Then, they use that data to commit fraud in another channel.
- Card-testing fraud: This is a fraudulent move that has been used for many years and is commonly referred to as ‘stolen card number testing’. The fraudster acquires stolen card credentials that are later used on a merchant site. This is usually just an attempt to confirm if the credentials are still valid. If they are, the hacker uses that data to carry out small transactions. According to statistics, there has been a 200% increase in card-testing fraud since 2017.
- Card-not-present (CNP) fraud: This is another common scam that never gets old. The fraudster uses a stolen credit card to make online purchases. Since the retailer may not have a way to physically confirm the card, the fraudster is able to get away with the scam.
- Mobile payment fraud: Mobile payment fraud has grown to outpace web fraud. This isn’t much of a surprise considering the fact there are more mobile users now than in the past. It simply involves scams carried out via phone calls and mobile apps. If you download an application from an unknown source, your phone may get infected with malware. The corrupted application is linked to the hacker's system. Since they can see everything that you do with your phone, they can easily steal your financial information if you make online payments through your phone.
- Return fraud: Return fraud can be carried out in many ways. The most known way is one whereby a buyer purchases a product and claims a refund despite receiving it on time and in good condition.
- Click-and-collect fraud: Here, the hacker steals your credit card information online, then makes an online purchase. In this case, the buyer is supposed to pick the item from the physical store. The hacker carries your credit card to the store to show that they are the ones that bought the item before picking it up and going home with it. In most cases, they will try to speed up the process so that they are not caught for being fraudsters.
The Prevalence of Omnichannel Fraud
According to research, 58% of e-commerce businesses experienced some form of fraud this year. The majority (63%) of these businesses experienced a surge in the number of fraudulent transactions carried out through the mobile phone.
How to Prevent Omnichannel Fraud
Since omnichannel crime is on the rise, it’s important to apply the following measures so as to protect the customer at all costs:
- Data encryption will restrict third-party access and keep data safe
- Apply strict security systems for your e-commerce business website
- Carry out frequent assessments across all channels to track fraudulent activity
- Implement an appropriate fraud prevention strategy
Omnichannel crime is becoming more prevalent as hackers find new ways to steal personal data. As a result, people need to be more aware and alert. The more businesses and customers become aware of the issue, the easier it’ll be to prevent omnichannel crime.
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