2nd May, 2022
Digital wallets popularity is on the rise. It is often that app where a user tends to store gift and loyalty cards, stores coupons, converts payment methods to points etc. Also, it doesn’t come as a surprise to hear that fraudsters, too, are keeping up with the trend and finding ways to indulge in fraudulent activities.
Digital wallets saw a painful 200% surge in payment fraud attacks between 2020 and 2021, according to Sift’s recent report. Reports stating that PayPal accounts now being “more lucrative than credit cards” exemplify the current situation.
Brian Pramov, Datavisor, Microsoft’s Sondra Feinburg, Christopher Ruisi, Fiserv and Bill Ralston, Topps Digital Services spoke about scams and managing digital wallet risk during LSA April Monthly Trends Webinar – Digital Wallets and Fraud in late April.
Facing the wrath of consumers
Sondra and Ralston highlighted that digital wallets are being increasingly used owing to the convenience aspect, but it also means that consumers come heavily in case of something going awry.
Merchants don’t only pay for digital attacks in lost revenue, but in chargeback fees, too. Sondra said members of a loyalty program, even though they are inactive, tend to blame brands in case any illegitimate activity occurs, be it for data breaches or use of a digital wallet by a fraudster. She said protecting unused digital wallets must be looked into. Sondra referred to a set of unscrupulous elements, including hackers, employees and even members. It is not only vital to shield consumers but also avoid issues like false positive errors.
Pramov spoke about the issue of account takeover (ATO) and the significance of anomaly detection, and ensuring how one doesn’t get “hacked”. If a hacker’s attempt is fruitful related to an ATO (for instance, using automated injection of username and password pairs into website login forms), they start malicious activities on the e-wallet. Ruisi, too, referred to brute force attacks, a tactic that relies on excessive forceful attempts to try and ‘force’ their way into someone’s account.
Pramov recommended a multi-layered approach, i. e. to eliminate fraud risk without compromising the UX (user experience), to combat the problem as being proposed for fraud prevention in general. The objective is to leverage risk intelligence throughout the entire user journey. “You can’t only rely on rules or remain static,” he said.
It is imperative to focus on behavioral analysis (for example, spotting abnormal behavior for the user, based on their past history), card fingerprinting and relying on machine learning to predict fraud patterns in a digital wallet transaction.
By Ritesh Gupta, Ai Team
