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Table of Contents

Lead Story

Tapping into the U.S. economic pulse

Ann Train

News

Industry Update

Expect more growth in mobile payments, banking

Fed study finds growth in noncash transactions

Yahoo breaches analyzed

NFC Forum adds specs, Chase goes QR

Features

Sizing and Profiling In-App Payments

Views

2017 – A look back, a look forward

Brandes Elitch
CrossCheck Inc.

Fed updates payments data

Patti Murphy
ProScribes Inc.

The link between company values and ISV relationships

Kelly Cullum
Tantrum Street

Education

Street SmartsSM:
Accounts receivable factoring

John Tucker
1st Capital Loans LLC

Don't make fraud this winter's fashion trend

Don Bush
Kount Inc.

Why do you work?

Jeff Fortney
Clearent LLC

ISO versus MLS status in 2017: The stakes are high

Adam T. Hark
Preston Todd Advisors

Company Profile

Pearl Capital LLC

New Products

Mobile app for convenient, secure cashless tipping

Tipatuity
SmartBlue Technologies Inc.

All-in-one POS, business management solution

NCR Silver
NCR Corp.

Inspiration

Making the most of networking opportunities

Departments

Letter From the Editors

Readers Speak

Boost Your Biz

Resource Guide

Datebook

Skyscraper Ad

The Green Sheet Online Edition

January 09, 2017  •  Issue 17:01:01

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Don't make fraud this winter's fashion trend

By Don Bush

Fashion retail has evolved. With the growth of mobile commerce; the recent shift to EMV (Europay, Mastercard and Visa) in the United States, which has brought more fraud to online and mobile transactions; and events such as Amazon Prime Day driving surges in ecommerce activity throughout the year, retailers must make sure they are prioritizing both security and convenience for their customers. Read on to learn how you can help fashion retailers in your portfolio be informed so they can navigate these new horizons to increase their bottom lines while protecting their businesses from fraud.

According to FashionUnited (https://fashionunited.com/global-fashion-industry-statistics), the U.S. fashion industry has a domestic market value of $385.7 billion and employs approximately 1.8 million people, making it a major economic player. Big business means big brands and a big customer base, but the flipside of attracting such a reputable and wealthy clientele is the attraction of fraudsters who seek to acquire a share of the profits through less-than-honest means.

How fashion fraud works

Consumers and retailers alike are both targets of fraudsters, and the former have increasingly found themselves victims of online scams. This is especially true on social media, where consumers are sold poor quality or fake goods by retailers who disappear when things go wrong.

Consumers are more trusting of links shared on social media by a friend or acquaintance, rather than a total stranger. However, accounts can easily be hacked, and people can fall for scams without realizing it. Fashion fraud reaches its peak during periods such as Black Friday and the sales season as consumers are expecting bargains and eye-catching discounts. This means they are less likely to approach too-good-to-be-true offers with skepticism, creating fertile ground for fraudsters.

On the retailer side, merchants of all sizes can fall victim, too. Fashion merchandise is hot property for criminals; it can have high value and can be easy to resell on the black market. Consumers may snag what they think are designer goods at bargain pricing without knowing that they are dealing with criminals selling illegal goods.

Fighting back

To combat this type of fraud, consumers must be aware of the various schemes out there. If something looks too good to be true, it almost always is. Designer goods can't be bought for a few dollars, no matter what holiday or sale may be happening. And the fact that an online friend has "endorsed" a company touting these goods is no sign that it is trustworthy.

There are key signs to look out for: free shipping anywhere worldwide, a discount on your first purchase, or the head is cut off the model wearing the product online (meaning that it probably wasn't the retailer's photo or indeed, clothing, in the first place). Consumers should also do their research. A quick online search will usually reveal if a company is legitimate. If there is no evidence of it online, then that should be taken as a warning sign too.

For retailers, the challenge to fight fraud is more complex, but much like consumers, they must start with becoming knowledgeable. Here are some tips:

  1. Know your customers. It is essential for retailers to be able to tell the difference between normal customer behavior and suspicious behavior. Is a customer who normally buys smaller items suddenly buying big-ticket items? Has the customer's delivery address changed? Is the person accessing from a mobile when he or she normally accesses from a laptop? All of these signs, and more, can be indicators that a transaction might be fraudulent.
  2. Where is the transaction coming from? Mobile commerce has revolutionized how consumers browse and buy, but it has also opened up new opportunities for criminals. Mobile is less secure than other ecommerce channels; therefore transactions that come from mobile should be treated with extra caution. Yet research reported in Kount's Mobile Payments & Fraud: 2016 Report shows that only 42 percent of merchants can tell if a transaction came from a mobile device. The first line of defense is intelligence and without it, retailers are leaving themselves open to fraud.
  3. Challenge chargebacks. Chargebacks go hand in hand with card-not-present fraud. A chargeback is when a consumer purchases something with a credit card and, if the goods are not received or arrive broken, the consumer can request the costs back from their credit card provider. But what was a valuable way of protecting consumers against fraudulent merchants has fast become a way for merchants to be defrauded.

    It can be difficult for merchants to successfully challenge chargebacks, leading them to get the double whammy of losing goods and then losing money from the subsequent chargeback fee. It's not just professional criminals who carry out chargeback fraud, though. It's carried out by everyday consumers who would never consider themselves criminals. Early warnings of chargebacks and disputed transactions can give retailers the chance to challenge them with confidence.

Fraud is a major challenge to the fashion industry, and one that will continue to grow unless precautions are put in place. From damaging consumer confidence and consumers unwittingly supporting bootleggers to fraudsters hitting retailers with stolen payment methods, it is something that everyone with a stake in the industry must work together to fight.

The technology needed is available but it will also take a spirit of collaboration and consumer education to fight back against fraud successfully. Ecommerce and mobile commerce are opening up new opportunities and driving sales for fashion retailers. They cannot be allowed to let fraudsters act with impunity.

Don Bush joined Kount as Director of Marketing in October 2010 and became Vice President of Marketing in December 2012. Previously, he was Director of Marketing at CradlePoint, a leading manufacturer of wireless routing solutions in the mobile broadband industry. Don has worked in several management roles within the technology segment for over 20 years with both hardware/software manufacturers and as a partner in two top technology marketing agencies. He has led products launches and marketing programs for dozens of companies around the world such as Citi, HP, IBM, Kodak, Motorola and Weyerhaeuser, and he co-authored the seminar series, "Common Launch Disasters and How to Avoid Them." Contact him at don.bush@kount.com.

Notice to readers: These are archived articles. Contact names or information may be out of date. We regret any inconvenience.

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