The cost of mobile fraud – $92m and counting…

Research has revealed that the average annual loss due to mobile fraud sits at $92.3 million. While average internet fraud losses are said to be between 6 and 10 per cent for most companies, mobile fraud is proving to be a bigger pill to swallow with average fraud rates between 10 and 24 per cent [1].

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With a new study revealing that a third of the UK population (33 per cent) believe that smartphone payments will overtake credit and debit card payments by 2020 [2], the spotlight really has been put on how retailers can look to invest in methods of protecting their customers and business from mobile fraud, or risk reputational damage.

This year has proved to be a tipping point for smartphones and tablets – the rapid rise in demand for mobile e-commerce combined with very little security on devices has created a massive opportunity for cyber criminals, leaving many people and businesses extremely vulnerable.

A significant problem…

An Experian survey of 2,000 UK adults showed that 60% smartphone users and 48% of tablet users admit they have no malware protection on their devices. Around one in three (29%) said they weren’t aware they needed anti-virus software. A further one in 12 (8%) believed fraud protection software was too expensive.

Nearly one in eight (12%) thought their mobile service provider automatically covered them and one in 12 (8%) thought they were protected by the organisation they had transacted with [2].

Our analysis also found that one in six UK adults who own a mobile device, have already fallen foul to a cyber-attack within the past year. More than a fifth (21%) suffered a smartphone attack and almost one in six (17%) a tablet attack.

Mobile is growing and here to stay

These findings come at a time when smartphones and tablets have become an integral part of daily life, providing instant access to websites. But, it has also created huge opportunities for fraudsters.

Use of tablet computers to access the internet among adults has almost doubled from 16 per cent in 2012 to 30 per cent in 2013, and nearly two-thirds (59%) of consumers access the internet through a mobile phone – up by six per cent since 2012.

The growth in online and mobile for retail transactions has also meant that validating identities online has become increasingly complex. While mobile offers excellent convenience for customers, providing 24/7, anywhere access to services, fraudsters can take advantage of devices which do not have adequate security installed.

Protecting your business and customers from fraud

Organisations must adapt their systems to not only provide the fast and convenient online service that their customers want, but at the same time, protect those customers and their business from fraud.

Device intelligence is one way businesses can verify and authenticate customers using their device information from the first point of contact. Every time a customer logs in to a website, the technology is designed to flag inconsistencies and potential fraudulent activity, reducing cases of fraud and protecting both the individual and the business.

Sources:
[1] Pymnt.com – What’s next in payments, 6th Feb 15.
[2] Opinium research, Aug 2014.
[3] Experian 41st Parameter, Gartner, IDC and Bloomberg.