More people are using their phones to buy, sell, and browse than ever before. The number of mobile devices in the world is increasing five times faster than the human population, which is good news for m-commerce companies – but also for fraudsters. Although mobile transactions account for less than a third of total purchases, they make up over 20% of fraudulent transactions. What do businesses and consumers need to know about payment fraud to stay of the scammers?
1. The mobile share of global e-commerce is growing fast.
By the end of this year, mobile payments are expected to account for 70% of global revenue.
2. But businesses aren’t prepared to deal with mobile fraud.
In fact, only 14% have a system in place to detect and respond to mobile fraud, and most learn about attacks from their own customers.
3. When mobile fraud hits a business, it hits hard.
For each dollar used in a mobile payment scam, a merchant loses $3.34. That’s more than the cost of a fraudulent credit card transaction or mail order.
4. Mobile fraudsters are crafty.
The most successful mobile scams involve preying on users who aren’t paying close attention while using apps and scrolling past ads. In one popular scam, fraudsters post online ads for cheap used cars, and then trick buyers into wiring funds through app that’s designed to look like Google Wallet.
5. Bugs and loopholes are a fraudster’s best friends.
When a company launches a new device or app, fraudsters scour the product for glitches to exploit. When Apple Pay made its debut, for example, it was hit with numerous duplicate charges. Similarly, hackers exploited a bug in a Chilean transportation app that allowed customers to top off travel credits without incurring a charge.
6. Biometrics might inoculate users against the mobile payment fraud pandemic.
Phones with fingerprint readers, like the iPhone, are tougher for fraudsters to crack. Although hackers have claimed that they can bypass biometrics, we have yet to see evidence that it’s true. For the time being, mobile payment services like LoopPay are adding biometric features.
7. Payment platforms aren’t the only problem.
Ad fraud is also growing more prevalent. In fact, revenue from ad fraud will probably exceed $50 billion globally by 2025 and is second only to drug running as a source of income for organized crime.
8. Mobile ad fraud can take multiple forms.
Install fraud is when scammers hide malicious software in apps that are designed to look like familiar apps, such as Google Pay or Spotify. Impression fraud happens when cybercriminals hijack apps consumers have downloaded so that these apps constantly load, forcing advertisers to pay and eating consumer data. Scammers engaging in click fraud create bots that generate ad clicks, or that load multiple ads on a user’s screen that must be manually closed one by one.
9. The internet of things (IoT) could exacerbate mobile security issues.
Surveys show that companies and users are concerned about attacks against mobile and IoT devices. As more “smart” technology is integrated into homes and workplaces, the possibility of attack via insecure apps increases, too. However, most organizations aren’t prepared to deal with such attacks.
10. Protecting your business against mobile fraud is crucial.
As mobile platforms become more integral to people’s business and livelihood, fraudsters stand to prosper. Take steps to protect yourself with Sift Science’s mobile fraud detection solution.