Companies are under constant demand to provide consistent and secure online experiences and transactions.
Authenticating consumers, however, often serves as the biggest challenge for e-commerce retailers.
Retail e-commerce sales in the United States are expected to grow 56% through 2026, according to eMarketer and Statista. Yet, e-commerce losses due to digital payment fraud in 2022 amounted to $41 billion globally, and industry analysts predict that figure will reach $48 billion by the end of 2023.
The plague around the practise requires e-commerce companies, as well as performance and affiliate marketers alike, to purge their processes.
To help you gauge the effectiveness of your fraud prevention measures, we’ve introduced a brand-new tool: the Marketing Fraud Prevention Proficiency Quiz.
Take the Quiz
One of the companies leading the charge against fraud detection and identity verification practises is Kount, an Equifax company and fraud prevention and digital identity solutions provider.
Kount’s technology builds personal profiles with hundreds of data points — propensity to spend, buying habits, payment history, and more — so that businesses fully understand who is interacting with their brand.
Kount’s network uses artificial intelligence and machine learning to connect trust and fraud data signals from 32 billion digital interactions, 17 billion devices, and five billion yearly transactions across 200 countries.
The Boise, Idaho-based brand — which was acquired by Equifax in 2021 for $640 million protects more than 9,000 businesses worldwide, including the likes of eHarmony, Getty Images, AMC, GNC, and Bodybuilding.com, among many others.
How have advances in technology contributed to the prevalence of online fraud?
Przybyla: The advances in technology have not only brought benefits and increased the ease of online interactions but have also made it easier for both criminals to exploit emerging technologies for their own gain. Cybercriminals have evolved their methods for targeting platform data and thus obtaining consumer personal information. Once obtained this information can be traded in the dark web resulting in sophisticated fraud attacks.
Schaffer: Within the affiliate marketing industry, automation tools used by bad actors to perpetrate fraud are evolving and becoming more sophisticated by the day. Scripts, bots, and other mechanisms that emulate the behaviour of real users create an environment where significant amounts of personal data can be manipulated to generate fraudulent leads. These tools, coupled with additional technological advancements related to both data scraping and identity fraud, create a challenge for the industry to identify and reduce this type of fraud.
How have e-commerce businesses become more susceptible to fraud? What areas of the business are increasingly vulnerable?
Przybyla: E-commerce has a higher susceptibility to fraud since it doesn’t require a physical presence of either the customer or the payment method at the point of transaction. The fraudster can simply buy stolen credit cards from the dark web and use the information to make purchases in a way that allows the fraudster to remain anonymous and perform the attacks from anywhere in the world.
How have businesses that rely on lead generation become more susceptible to fraud? What areas of the business are increasingly vulnerable?
Schaffer: Lead generation fraud takes many forms. The lack of adequate and standardised fraud prevention and detection measures coupled with the ever-increasing complexity of lead generation processes expose businesses to purchasing fake leads. When left unchecked, this results in significant financial losses, exposure to compliance violations, misplaced attribution, and reputational damage.
What fraud prevention measures are most effective for e-commerce businesses?
Przybyla: Implementing an end-to-end solution that incorporates both supervised and unsupervised machine learning is the most effective way of preventing fraud in e-commerce. Unsupervised machine learning detects emerging attacks and is able to identify the characteristics and patterns of the attack. Supervised machine learning takes historical insights and recent outcomes to confidently assess the risk associated with a transaction. Making sure you combine artificial intelligence and machine learning with a solution you can implement at various interactions in the customer journey, like Kount, can help detect fraudsters sooner and prevent their flow through the journey.
What fraud prevention measures are most effective for affiliate marketing businesses?
Schaffer: Deploying thorough and customised validation rules and processes which verify the legitimacy of leads in real-time and filter out fraudulent traffic requires systems capable of verifying contact information, such as email addresses and phone numbers, as well as identifying anomalies related to both individual user behaviour and abnormal changes in KPIs associated with a given lead source.
Which fraud prevention security measures should be used in conjunction to provide the best possible protection against fraudsters?
Przybyla: State of the art artificial intelligence and machine learning combined with tried and true fraud expertise capable of assessing your fraud strategy and providing insights and recommendations to optimise your fraud strategy is the best way to stay ahead. Successful fraud prevention strategies don’t just focus on keeping out the bad guys. Instead, they focus on providing the best customer experience while simultaneously increasing revenue.
Schaffer: Usage of a robust tracking platform with integrated fraud detection capabilities combined with effective monitoring and analytics is a key requirement for any business looking to prevent fraud. This, however, must be utilised in tandem with creating thorough vetting and due diligence processes when selecting affiliate partners.
How are Kount and Phonexa staying at the forefront of fraud protection and keeping business both safe and confident? What are some of the recent milestones you’ve accomplished on this front?
Przybyla: Attack vectors are constantly evolving and becoming more sophisticated. Combining the best in class artificial intelligence and machine learning technology with a data network composed of both depth and breadth allows Kount to provide accurate and confident responses in real-time. Creating APIs to access evaluations and scores at various interaction points in the customer journey allows merchants to make confident decisions around the customer trustworthiness. Kount’s 360 platform will combine Kount’s technical expertise with Equifax data to provide an end-to-end solution to assess the trustworthiness of the payment event, customer identity, and event compliance within a single platform at various points in the customer journey.
Schaffer: Our customer needs in their respective businesses are unique, so we’ve created an all-encompassing anti-fraud toolbox, iClear, that allows them to rapidly customise multiple layers of fraud detection and prevention. Additionally, we have built integrations with other leading fraud prevention providers to give our customers the flexibility to deploy third-party services within the Phonexa platform.
About the Experts
Scott Przybyla is the Vice President of Global Channel Partners at Kount, an Equifax Company. He joined Kount in 2018 to run the Direct to Merchant side of the business. In 2021, Scott assumed the role of leading the Global Channel Team where he is responsible for ensuring partners worldwide are protected against online fraud so that individual merchants/sub-partners can grow revenue efficiently and safely. Scott has been in leadership roles for 25 years and always in customer-facing positions. Prior to joining Kount, Scott worked in the commercial real estate industry where he led teams of agents who sold a variety of investment properties.
Jeff Schaffer is the Chief Operating Officer of Phonexa and drives new initiatives and expands brand awareness for the company. Schaffer is a seasoned business professional and executive with over 22 years of experience in business management, sales development, and digital marketing transformation. His diverse experience has landed him in leadership roles across top firms in financial services, insurance, e-commerce, and performance marketing.
Get in touch! We are available 24/7.
