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Mobile has fewer fraudulent transactions than desktop: study

There are fewer fraudulent transactions in mobile compared with desktop, according to new data from ThreatMetrix.

In December, merchants using ThreatMetrix’s automated tools scored approximately 25 percent of mobile transactions as either somewhat risky, risky or very risky, with the majority of transactions falling into the somewhat risky category while over 30 percent of online transactions were scored risky in some way. With the number of mobile transactions growing significantly in the past year, smart merchants are increasingly monitoring these transactions to look for fraud.

“Merchants are finding less risky transaction in mobile than desktop,” said Alisdair Faulkner, chief products officer at ThreatMetrix, San Jose.

“One way to take this is that mobile transactions are not as risky as people think,” he said. “These are personal devices that consumers are very comfortable with and, as a result, mobile users tend to be very motivated purchasers.

“The other possibility is that merchants are loosening the automated scoring and doing more manual reviews of mobile orders, which makes sense because these tend to be very valuable orders.”

Manually reviewed orders do not show up in ThreatMetrix’s analysis.

Unchartered waters
In general, merchants are confident in their ability to know when a desktop transaction is risky because they have more experience here, per Mr. Faulkner.

While merchants typically manually review between 10 – 25 percent of online transactions, per Mr. Faulkner, they may be manually reviewing more mobile transactions because of their relative lack of experience here.

“The problem from a marketer’s perspective is that with mobile you have a new great way to acquire customers but the issue is that every order needs to be screened,” Mr. Faulkner said. “How do you make sure you have footholds in place, so that a mobile customer is screened in a way that does not inadvertently create false positives or shows that a good customer is bad.

“They do not know so much in mobile and want to make sure they are not throwing the baby out with the bath water by deeming some mobile transactions too risky,” he said.

Last year was the first time mobile became a material percentage of merchants’ overall business and, therefore, something that they need to pay attention to in terms of fraud.

Easy targets
Mobile transactions are more difficult and complex to screen compared to desktop transactions for a variety of reasons, per Mr. Faulkner.

For example, mobile users can change their location frequently and switch between mobile networks and Wi-Fi , making it difficult to determine if a transaction is coming from a legitimate customer or someone using a stolen credit and trying to approximate the location of a customer.

Another threat is transactions from Third World countries that come through a browser that easily enables the user to make it appear as if the transaction is coming from another country.

“Ecommerce mobile transactions increased 500 percent in terms of transaction volume in a year – it is something that needs to be paid attention to,” Mr. Faulkner said.

“In 2011, 130 million personal IDs were stolen,” he said. “Merchants are an easy target for cybercriminals who have captured this type of information to do a transaction.”

Final Take
Chantal Tode is associate editor on Mobile Commerce Daily, New York