Online payment credit card processors have started to use social media to help combat online payment fraud, a problem that cost an estimated $3.5 billion in 2012 alone.
Fraud solution companies and credit bureaus are responding by putting together systems to detect identity fraud through the use of data points stored on individual and business social media pages and accounts. Enterprises have begun to use social data to measure risk in online payment processing, a fairly new concept that could very well help save millions of dollars in fraudulent transactions.
Rajib Roy, president of Equifax Identity and Fraud Solutions says they too are investing a lot of time and energy into utilizing the millions of data points that are available out there on social media platforms to find ways to facilitate identity proof and fraud prevention.
While all businesses are subject to fraud, small to midsize businesses (SMBs) are especially vulnerable because they simply don’t have the infrastructure or the resources to help keep protective measures in place. As a result, they depend heavily on their credit card processors to put these safety precautions to work for them.
In addition to the risk of lost money, time and energy because of money stolen during online payment processing, small companies are also particularly at risk of identity theft; unfortunately, it is fairly easy to steal a small business name, address and merchant identification number, which then enables fraudsters to set up fake merchant accounts under a stolen ID and steal money from unsuspecting consumers.
Like any identity theft, this could result in a major disruption of life and business as a small company knows it, creating a situation wherein the company could be held accountable for transactions made fraudulently in their name.
These small and midsize businesses particularly depend on their merchant account service providers to help combat this threat.
Yes, it is, admittedly, pretty easy to set up fake social media accounts; what isn’t so easy is faking the history that goes along with them. While it is true that fraudsters can pay for fiverr gigs to “get 50 likes” (or more!) within a day, it isn’t so easy to fake the profundity of life. Sure, thieves can put some effort into taking pictures in different settings, a la Andie McDowell and Gérard Depardieu in the movie “Green Card”, but studies by Trulioo, the developer of a suite of identification verification products that are built on the concept of social proof, show that the average person is tagged by others in excess of 70 times per year. In addition to that, the social media platform LinkedIn allows user’s colleagues and associates to endorse them for skills, as well as listing, in most cases, full user CVs. The reality is that it would be pretty difficult for a fraudster to create that kind of timeline, history or social proof in a fake social media account; fraudsters would have had to start years in advance and also sport a huge collaboration with others.
That is great news for enterprises that are using social media to help combat fraud. The bottom line is, the use of social media to assess the authenticity of a user is less expensive and more thorough, given the fact that a credit score, for example, only shows a small snippet of a person’s credit history and really doesn’t show any detail at all. Utilizing social media to run verification checks is faster and more cost-effective; also, it works.
3G Direct Pay has been using social media as a verification method for years and has found it to be a tremendous benefit both in online payment fraud prevention for clients and in gaining assurance that new merchant account applicants are legitimate; the implementation of social media verification efforts has reduced losses by millions of dollars.
The reality is that Internet thieves are getting craftier all the time; the good news is though that social media has given us a much clearer picture of those attempting to open accounts or process payments, making it much more difficult for fraudsters to hide.
Eran Feinstein is the founder of 3G Direct Pay Limited. 3G provides global e-commerce and online payments solutions for the travel and related industries He is a leading authority in the fields of e-commerce, travel and payments, having acquired extensive experience from various parts of the world.