The COVID-19 pandemic has profoundly impacted the global business landscape. One of the most pressing challenges is the spike in fraud. According to a survey by payment processor Stripe, 64% of business leaders agree that fraud prevention has become more difficult since the pandemic’s onset.
Credit Card Fraud in the United Kingdom
In the United Kingdom, credit card fraud has been on the rise in recent years. According to UK Finance, a trade association for the finance and payments industry, there were 2.3 million cases of credit card fraud in 2020, totalling losses of approximately £574.2 million. This marked a 7% increase in credit card fraud incidents compared to 2019.
The increase in credit card fraud during the pandemic can be attributed to several factors. The shift to online shopping and remote work has led to an increase in remote purchase fraud, accounting for 89% of all reported credit card fraud cases in 2020. Additionally, criminals have taken advantage of the increased online activity to target vulnerable individuals and businesses, using phishing and social engineering techniques to steal credit card information.
E-Commerce Expansion and the Risk of Fraud
The pandemic triggered a massive expansion in the e-commerce market. Many established businesses had to shift to online sales, and countless new e-commerce companies emerged. Unfortunately, this rapid growth, often spearheaded by inexperienced entrepreneurs, created the perfect breeding ground for fraudsters. Many new websites overlooked crucial security measures in their pursuit of sales and profits.
The influx of online shopping also posed a challenge for well-established companies as they scrambled to meet the increased demand. The sheer volume of transactions allowed fraudsters to go unnoticed, as manually reviewing each order became virtually impossible.
Staying One Step Ahead of Fraudsters
The industry must adapt and innovate to stay ahead of fraudsters and their ever-evolving tactics. While fraud will always exist, implementing the correct measures can help businesses effectively combat it in the future. One effective approach is for card issuers and businesses to collaborate in sharing customer data, thereby confirming or denying transactions based on this information. For instance, when a credit card is used on a website, both the issuer and the company can review the IP address to determine if it matches the user’s regular activity. This method helps reduce credit card fraud without exposing sensitive data.
Implementing Fraud Prevention Techniques
Implementing advanced technologies, such as artificial intelligence and machine learning algorithms, can also help in the fight against fraud. These technologies can analyse vast amounts of data in real-time, identify suspicious patterns, and flag potential fraudulent activities. Furthermore, businesses can take steps to secure and encrypt their websites, making it harder for fraudsters to access sensitive information.
Another crucial aspect of fraud prevention is investing in employee training and education. Regular training sessions can keep employees updated on emerging fraud trends and equip them to detect and prevent fraud in real-time. Employees should be well-versed in the latest fraud prevention techniques and know the warning signs to watch for when processing orders.
Combating Fraud in a Post-Pandemic World
The COVID-19 pandemic has created a challenging environment for businesses, with the boom in e-commerce making fraud prevention even more difficult. However, by adopting a proactive approach and working together, companies can mitigate the risk of fraud and safeguard themselves against evolving threats. Collaboration between card issuers and businesses to share data, implementing advanced technologies for fraud detection, and investing in employee training and education are all essential measures.
By putting these strategies into place, businesses can effectively fight fraud and protect themselves from becoming victims of fraud in the future.
