It led to shutdowns, lockdowns, businesses and workplaces had to send employees to stay at home. Public health authorities also imposed social distancing to contain the spread of the virus, which profoundly altered the way many learned, worked and connected with loved ones.
It also changed the traditional ways of carrying out essential daily tasks. Individuals today are increasingly reliant on mobile applications, online channels, and cashless payment methods to purchase the things they need. In response to the significant increase in media consumption, businesses had to amplify their online presence by creating new business models to provide consumers with a more convenient and seamless service.
However, these changes and recent development deepened the concerns for cyber security risks, particularly fraud. According to research conducted by Javelin Strategy &Research in 2020, there has been a significant 35% increase in fraud attempts worldwide. Many expressed their concerns as criminals become more sophisticated with their tactics and active in committing them.
Friendly fraud is among the rising threats to online businesses today. This type of fraud occurs when a customer purchases with a debit or credit card and then disputes the charge with their bank by mistake or with ill intent. The difference it has over actual fraud is that it occurs due to unauthorized credit card use. On the other hand, in friendly fraud, the owner of the debit or credit card themselves perpetrates fraud through a chargeback service.
Friendly fraud is also known as first-party fraud, and it can take many forms. It typically involves consumers obtaining products and services from a merchant then claiming that they did not make any purchase, did not receive what they bought, request a refund from a false claim, and keep the goods or services without paying for them.
It is named “friendly fraud”because retailers believe that the customer made a legitimate claim. Perpetrators of this fraud are often good at their crimes, making it harder for customer service to identify a fraudulent claim. In 2021, Business Wire revealed that 8 out of 10 merchants experienced friendly fraud attacks.
While knowing about it does not guarantee that businesses will not be victims of this fraud, there are ways that they can employ to reduce or eliminate friendly fraud. One essential strategy to consider is using FIDO2 passwordless authentication to supplement risk-based traditional authentication measures.
Passwordless authentication can enhance an organization’s digital payment security through biometric authentication that uses an individual’s biological traits to verify a user’s identity. In contrast with traditional authentication methods, biometric verification makes it harder for cybercriminals to steal a user’s identity and essential information, even with sophisticated tactics.
Moreover, it can improve a user’s experience as it is convenient and easy to perform. But businesses have to ensure that they must only trust authentication solutions providers like LoginID. They also offer secure transaction confirmation with a digital signature.
To learn more about friendly fraud and how to prevent it, you can visit LoginID’s website.