Online purchases are on the rise with Americans making over $500 million of eCommerce purchases in 2018. Not surprisingly, this growth has been accompanied by an increase in eCommerce fraud. Recent studies show that credit card fraud alone cost retailers 8% of their annual revenue and that 36% of new accounts created on eCommerce sites are fake, practically guaranteeing they will be used by criminals to commit fraud.
Problems have worsened as many fraudsters have automated their assaults using a growing number of malicious bots. This means online merchants need to significantly up their game by switching to more stringent authentication powered by behavioral biometrics.
Bot Fraud and Its Consequences
Due to the fact that bots can perform thousands, if not millions, of transactions in a very short amount of time, even those created by novices can cause significant damage to businesses. For example, by creating fake accounts or stealing merchants’ pricing data to drive competitors out of business with predatory pricing.
Malicious bots are widespread, with the most recent statistics showing that they account for 21.8% of all Internet traffic and 21.45% of all eCommerce Internet traffic.
There are many types of bot-based fraud, with the following five being the most common ones:
- Account Takeover: Bots taking over legitimate accounts in order to make unauthorized purchases or create fictitious transactions, costing American businesses $5.1 billion in 2018 alone.
- Carding: Stealing and trafficking credit card data, as well as related financial information can cause immediate direct losses, as well as damage via identity theft fueled by the stolen data.
- Price Scraping: Malicious bots can extract pricing information from competitors, allowing fraudsters to instantly post lower prices or otherwise make use of the information.
- Digital Ad Fraud: Malicious bots are used to inflate the number of impressions seen, causing reduced click-through rates.
- Skewed Analytics: Inaccurate traffic data caused by malicious bots makes it impossible to analyze an ad campaign’s effectiveness or a website’s popularity.
Creating bots has never been easier. As a quick search on Google reveals, there are literally dozens of programs and online tutorials that even a novice can use to build bots. The ease at which bots can be created and launched only increases the need for effective detection solutions.
The Constraints of Static Fraud Detection Tools
eCommerce sites have been fighting malicious bots using a variety of static biometric techniques.
- CAPTCHAs: Although good at blocking some bots, they are annoying to customers, especially ones with vision problems.
- Blocking known hosting providers and proxy services: This is an “all or nothing” solution, blocking fraudsters as well as many legitimate users who use a listed provider or services.
- Static biometrics: Once considered the perfect solution, static biometrics such as fingerprints are actually fairly vulnerable. Fraudsters have learned how to hack smartphones and copy the fingerprints stored in them. The devices themselves have problems with fingerprint detectors, blocking legitimate users. Moreover, not only can real fingerprints be stolen, fake fingerprints can be generated.
In addition to being less effective than businesses would like, these methods interfere with the user experience, causing customers to abandon purchases or not use eCommerce altogether.
Continuous Authentication Detects Bots With No Side Effects
Continuous authentication uses the biometric data (gesture analysis, device intelligence, and behavioral anomalies) generated by smartphones and computer keyboards, in order to create a unique profile per user. Bots can’t mimic the tiny nuances of human behavior, so continuous authentication is very effective at detecting them.
Continuous authentication is performed seamlessly. There are no challenges; no passwords to remember, no text messages with a code to enter, and no number/letter combination to type. Just a smooth buying journey without the constant need to prove one’s identity.
This smooth journey means both increased profits and reduced fraud loss for businesses. Using continuous authentication means your customers’ shopping is never interrupted, while their identity is validated throughout the entire session. A hassle-free user experience will increase the number of sales as well as encourage customers to return to your online/mobile business. In addition, of course, you will successfully fight fraud and reduce the business overall fraud rater.
Behavioral Biometrics: The Clear Choice For The Future
Static fraud screening processes are losing the war against bots, emulators, malware, and other means of attacks. In addition, the more complicated these measures get, the more it affects the user experience, leading customers to make fewer purchases or transactions.
Behavioral biometrics technology offers a seamless way to continuously authenticate users and detect fraudulent activities, covering multiple fraud use cases, including bots. Businesses that implement fraud detection solutions based on behavioral biometrics will have a better advantage over those who use the more traditional static fraud detection tools.