Brick-and-mortar retail’s downward spiral appears to be accelerating. More than 8,600 retail locations will shut down this year, following the 5,077 that closed last year, based on data from Credit Suisse. Moreover, 2017 could surpass 2008 — the worst year for retail closures on record — when 6,163 stores shut down operations.
However, unlike 2008, when overall consumer spending declined with the onset of a global recession — the worst economic downturn since the end of World War II — today’s shop killer is online commerce, notably sales made on mobile devices.
By 2019, more than 60 percent of online retail sales will be made via mobile devices, which offer great convenience for buyers, according to research firm Riskified. Yet with the potential rewards come potential risks.
Mobile orders for digital goods, such as plane tickets and online gift cards, are four times as likely to be fraudulent as orders for physical goods, the Riskified report suggests. Further, mobile transactions in amounts greater than US$1,000 are three times more likely to be fraudulent than those worth less than $200.
By contrast, 96 percent of mobile orders in the lower price bracket are likely to be valid, the study found, compared to 91 percent carried out on traditional desktops or laptops.
“Sellers should recognize that mobile purchases are very different from traditional e-commerce purchases,” warned Emilie Gunzweig, senior fraud analyst at Riskified.
“Recognizing that an order was placed from a mobile device is an important data point that should be considered in evaluating the order,” he told the E-Commerce Times.
Merchants that have a high volume of mobile-based sales “should consider the use of the Address Verification System and require the three-digit CVV number when taking payment via debit or credit card,” suggested Lee Munson, security researcher at Comparitech.
Yet it is important to look at the whole picture of a mobile e-commerce transaction and consider the source, noted Riskified’s Gunzweig.
“An AVS mismatch from a desktop may be cause for concern, but on mobile it’s not as much of a red flag,” he explained.
“Fraud rates for AVS mismatches on mobile are almost the exact same as a full AVS match,” Gunzweig continued, “and this makes sense, as AVS mismatches can be for a reason as simple as a typo — big fingers using a small keyboard.”
Time and Volume
What is being bought — and when — can be factors that should help retailers identify potential fraudulent transactions, at least to a point. If a purchase is for an unusual amount of items that should raise a red flag, and purchases made in the wee hours should be scrutinized as well.
“Take quantity of goods ordered: Single-item orders are risky from a desktop but safer on mobile, because while customers ordering from home often make the most of the shipping costs by ordering multiple items, mobile shoppers are likely in a different frame of mind,” noted Gunzweig.
“A mobile shopper is more likely to view a purchase as…