Electronic Retailer - March 2012 - 32

Chasing Shadows
As expected, mobile technology is transforming the electronic retailing scene. But it’s leaving an unparalleled amount of fraud and security threats in its wake.

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BY ALISDAIR FAULKNER fraud prevention strategies and the expectations of mobile consumers. With more than 73,000 new malware threats released every day, the resolution of this struggle will be a core concern for electronic retailers in 2012 and for many years to come. For consumers, mobile technology represents the pinnacle of convenience. Within minutes of purchasing a smartphone, consumers can visit app stores and gear up with applications to enhance their mobile and brand experiences. But for fraudsters, app stores are digital honeypots, hubs for applications that can be loaded with malware and distributed unscreened. When you consider that most mobile users don’t take the time to install anti-virus or anti-spy solutions on their mobile devices, the threat posed by untrustworthy apps is huge – and growing larger everyday. Another major hurdle in mobile fraud prevention is that traditional anti-fraud solutions are no longer effective in the mobile universe. Threat monitoring based on IP addresses are outmoded since most mobile users connect through a variety of Wi-Fi networks and 3G gateways. And, unlike PCs, mobile devices don’t lend themselves to fingerprinting. Cookies and Flash technology aren’t universal to all mobile devices, not to mention the fact that the portability of mobile devices makes them prone to theft or loss. The real dilemma in the fraud-convenience paradox is that consumers expect mobile technology to deliver retail connections in real-time. Wireless providers advertise anytime, anywhere retail capabilities, forcing digital retailers to employ automated purchasing tools that can be commandeered for malicious purposes. Leading fraud prevention providers now have the ability to employ realtime proxy piercing for true IP address detection, intelligent packet inspection for subversion detection, cookieless device identification and other tactics to counter fraudsters’ preferred attack venues. But ultimately, electronic retailers need to identify mobile fraud solutions that provide robust anti-fraud protection and consumer safety without jeopardizing the real-time connectedness at the center of mobile’s appeal.

The concept of online fraud is old hat for most retailers and consumers. Although security and fraud threats are constantly evolving, the importance of robust online fraud prevention measures is apparent to everyone in the electronic retailing universe. When it comes to mobile technology, fraud is a much murkier issue. While consumers may express some concern about mobile retail fraud, a joint study recently conducted by ThreatMetrix and The Ponemon Institute revealed that 30 percent of consumers believe their fraud risk to actually be lower on a mobile device. This is a new channel ripe for fraud, as many consumers and retailers alike are still trying to figure it out. It doesn’t help the cause for fraud prevention measures when the majority of today’s consumers fail to take basic precautions when they interact with retailers on smartphones and other devices. Electronic retailers, on the other hand, have seen the damage cyber-criminals can cause and are acutely interested in enacting measures to protect themselves and their customers from mobile retail fraud. Yet, with mobile technology advancing at a blistering pace, the question is which fraud prevention measures are most effective in combatting the threats present in today’s – and tomorrow’s – mobile marketplace?

Best Practices for Retailers
Now that the mobile channel is driving real revenue for retailers, everyone agrees that the threat posed by mobile retail fraud needs to be taken seriously. Yet neutralizing the potential for mobile fraud won’t be easy. It will take a concerted effort by both consumers and digital retailers. Recognizing the real-time demands of mobile, there are several best practices that retailers can employ to mitigate fraud risks and create a safer mobile retail environment for consumers. 1. Security Layers: Layering is one of the single most effective weapons retailers have in their arsenal. Given the sophistication of today’s cyber-criminals, it must be assumed that any single fraud measure will

The Fraud-Convenience Paradox
At the heart of today’s mobile retail fraud challenge lies an ongoing tugof-war between sophisticated online

electronicRETAILER | March 2012



Electronic Retailer - March 2012

Table of Contents for the Digital Edition of Electronic Retailer - March 2012

Chasing Shadows in Mobile Retail
Calendar of Events
Industry Reports
eMarketer Research
IMS Retail Rankings
Jordan Whitney’s Top Categories
Lockard & Wechsler’s Clearance & Price Index
Cover Story CarMD Makes a DR Diagnosis
Selling in a Fragmented World
Case Study DR Marketing North of the Border
Advertiser Index
Bulletin Board
Classifieds
Electronic Retailer - March 2012 - Calendar of Events
Electronic Retailer - March 2012 - cover2
Electronic Retailer - March 2012 - 3
Electronic Retailer - March 2012 - 4
Electronic Retailer - March 2012 - 5
Electronic Retailer - March 2012 - 6
Electronic Retailer - March 2012 - 7
Electronic Retailer - March 2012 - 8
Electronic Retailer - March 2012 - Industry Reports
Electronic Retailer - March 2012 - 10
Electronic Retailer - March 2012 - 11
Electronic Retailer - March 2012 - 12
Electronic Retailer - March 2012 - 13
Electronic Retailer - March 2012 - eMarketer Research
Electronic Retailer - March 2012 - 15
Electronic Retailer - March 2012 - IMS Retail Rankings
Electronic Retailer - March 2012 - 17
Electronic Retailer - March 2012 - Jordan Whitney’s Top Categories
Electronic Retailer - March 2012 - 19
Electronic Retailer - March 2012 - Lockard & Wechsler’s Clearance & Price Index
Electronic Retailer - March 2012 - 21
Electronic Retailer - March 2012 - 22
Electronic Retailer - March 2012 - 23
Electronic Retailer - March 2012 - Cover Story CarMD Makes a DR Diagnosis
Electronic Retailer - March 2012 - 25
Electronic Retailer - March 2012 - 26
Electronic Retailer - March 2012 - 27
Electronic Retailer - March 2012 - Selling in a Fragmented World
Electronic Retailer - March 2012 - 29
Electronic Retailer - March 2012 - 30
Electronic Retailer - March 2012 - 31
Electronic Retailer - March 2012 - 32
Electronic Retailer - March 2012 - 33
Electronic Retailer - March 2012 - Case Study DR Marketing North of the Border
Electronic Retailer - March 2012 - 35
Electronic Retailer - March 2012 - 36
Electronic Retailer - March 2012 - 37
Electronic Retailer - March 2012 - 38
Electronic Retailer - March 2012 - 39
Electronic Retailer - March 2012 - 40
Electronic Retailer - March 2012 - 41
Electronic Retailer - March 2012 - 42
Electronic Retailer - March 2012 - Bulletin Board
Electronic Retailer - March 2012 - Classifieds
Electronic Retailer - March 2012 - 45
Electronic Retailer - March 2012 - 46
Electronic Retailer - March 2012 - cover3
Electronic Retailer - March 2012 - cover4
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