According to the latest PwC research spanning two decades, a record high of 51% of surveyed organisations reported incidents of fraud in the past two years. Don’t let fraud steal the spotlight! Unlock the secret to a secure and delightful customer experience (CX). Click here to learn how to make fraud prevention a positive part of your CX strategy – because your customers deserve the best.
Is investing in fraud prevention truly worth it?
Absolutely! But the real value goes beyond just the dollars recovered.
The rise in digital consumption has given rise to novel forms of fraudulent behaviour, underscoring the need for robust fraud management to drive progress and satisfy customers’ growing demand for digital interactions. While digital user interfaces and experiences have improved for most companies, many have faced challenges in enhancing fraud controls without negatively impacting the client experience.
Decoding the Connection Between Fraud Prevention and Customer Experience
Numerous organisations are struggling to cope with the massive volume of fraud attempts they encounter. In the financial sector, for example, countless banks are swamped by fraudulent activities to the point that they cannot achieve their online origination goals. They face difficulties in verifying identities efficiently while keeping costs under control, authenticating customers seamlessly without losing them due to longer than necessary processes and warding off fraud simultaneously. All this impacts the scale and expansion of any business.
Moreover, the nature of fraud threats has evolved dramatically. The culprits now range from nation-state actors, organised criminals, and cyber terrorists to insiders and local fraud rings. As technology advances, fraud attacks have become more frequent, swift, and effective. Common tactics include phishing, destructive malware, social engineering, deep fakes, and fraud-as-a-service exploit kits.
The accelerated movement of money typically heightens the risk of fraud. Moreover, the emergence of cryptocurrency has introduced new threat vectors that companies must learn to defend against, such as crypto ATM scams, crypto support impersonators, crypto confidence scams, and stolen credit card purchases of cryptocurrency. An investigation conducted by Coingeek uncovered a sophisticated web of cybercriminal activity:
- Exit scams and rug pulls are at unprecedented levels in the Web3 sector.
- Scammers are hiring “professional Know Your Customer (KYC) actors” to bypass regular verifications for as low as USD $8.
- KYC actors help rogue project owners gain trust in the crypto community before conducting insider hacks or exit scams.
- CertiK found a thriving marketplace for KYC services, hosted mainly on Telegram and Discord.
- Over 500,000 members were found to be involved in buying or selling fake KYC services on these marketplaces.
- Roles like acting as a Web3 startup CEO can pay upwards of USD $500 a week.
The risk undoubtedly intensifies when unsuspecting customers unwittingly share their authentication details with fraudsters who target their devices and accounts.
Perfectly Balanced, As All Things Should Be
As more customers interact with retailers online, fraudsters are devising new strategies to evade conventional fraud detection. The Fraud Prevention in Ecommerce Report 2022-2023 warns that the current global economic downturn may further widen fraudsters’ reach as they seek additional vulnerabilities in merchants and end-users to carry out their criminal activities.
In response to rising fraud, companies often adopt more stringent digital fraud protection methods, which can inadvertently degrade the customer experience and lead to frustration. Research shows that up to 40% of customers would abandon a 10+ minute application process and every 10 seconds added to it correlates roughly to a 5% increase in application abandonment. Then, on the transaction side, about a third (32%) of clients will give up on a purchase if they have problems making payments, and nearly half (47%) will do so if they encounter problems of any kind during the buying process (be it due to slow loading pages, long forms, long approval/delivery process, etc).
Customer loyalty is vital for any business, making it essential to prioritise customer experience in e-commerce risk assessments as consumers are 3.5x more likely to purchase from a brand after a positive CX. This presents a challenge: striking a delicate balance between preventing fraud and reducing friction for legitimate customers—a balancing act that all companies must master. Integrating additional data into decision workflows can help alleviate this trade-off, enabling companies to perform more accurate identity verification and effectively distinguish between genuine customers and riskier ones.
Ekata is a leading provider of business solutions that enable seamless experiences and combat fraud on a global scale. The company offers a range of lightweight APIs designed for comprehensive identity verification assessments at the outset of the customer journey. Abra, a leading wealth management platform for digital asset investors, has witnessed a surge in new account registrations due to the cryptocurrency boom. As a result, the company has decided to enhance its machine-learning fraud detection model to mitigate the risk of chargebacks and safeguard its business. The organisation opted to integrate the Ekata Identity Check API into their existing fraud prevention toolkit.
By identifying and grouping riskier users early in the customer journey, companies can confidently guide low-risk users through a frictionless sign-up workflow, resulting in a seamless overall transaction experience. This refined approach to digital fraud prevention fosters customer loyalty and retention, ultimately boosting lifetime value.
Unlock the secret to winning at business fraud prevention without compromising your customers’ experience! Partner with Ekata and let’s make it happen together. Simply click here to learn more.
