The coronavirus pandemic is changing all of our lives in ways we could barely have imagined twelve months ago. From stay-at-home-lockdowns to mandatory masks, to a new culture of increasingly working from home, we have all had to adapt to what is often referred to as the new normal.

But human beings are often better at adapting than we imagine and in this Brave New World we have seen our lives shift more and more away from physical interaction in shops, socialising environments and, of course, the office to doing the majority of our work and carrying out much of our lives online.

I recently had a good chat with Daniels Sevskis who is the Counter Fraud Team Lead at ECOMMPAY, his expert thoughts and insights have helped to shape this blog article, helping me to understand further the importance of the anti-fraud measures companies need to be taking to reduce their risk.

The coronavirus pandemic has seen a huge increase in the amount of time we all spend online. Sadly and rather predictably, cybercriminals have been taking advantage of this situation and, in recent months, we have seen dramatic increases in fraudulent activity. A great deal of this new fraud is a result of the internal systems of many businesses not keeping data safe or it being leaked to criminals. Poor housekeeping can cost you big time in 2020.

How have the payment companies readapted to this new troubling situation?

Like almost everything in life, it begins with re-educating people and creating awareness of the new challenges we face. This is particularly relevant to new merchants who either don’t understand how the eCommerce world fully functions or do not have fraud management processes in place. Existing clients too must be educated about any high-risk fraud they might face. 

I believe though that the best way to be prepared for the current uptick in criminals looking to exploit online merchants and their clients is to establish efficient fraud prevention systems. This requires a two-part strategy of machine learning fraud systems supplemented by good old fashioned professional human overview.

Firstly, your machine learning system is there to detect and identify suspicious or fraudulent activity. And then you have professional risk control managers keeping their beady eye on those flagged financial activities. Machine technology will identify the majority of threats but it lacks the natural intuition and knack humans have for spotting certain kinds of malicious activities. 

There is a debate currently as to whether industry and international regulations will have a significant impact on the ways in which we deal with fraud. Certainly, the likes of Mastercard and Visa - with the almost limitless resources they have at their disposal - are hard at work constantly creating more secure payment systems for merchants. Some financial institutions remain slightly behind the curve in terms of introducing tighter restrictions and stronger fraud prevention systems but as regulations tighten this will change. 

3DS2 Challenge

The global fight against cybercrime will be significantly impacted by upcoming new regulations for the 3DS2 secure protocol. This has been designed to improve upon the issues that existed with 3DS1 and will require businesses to make significant modifications to their security software systems.

This will though, in turn, cause headaches for some companies, especially for those that either don’t currently have the resources to update their systems in time for the September 2020 deadline, or simply cannot call upon the services of the developers who created their current systems in the first place.  

One short term trend I think we will witness is some businesses seeing a drop in payment conversions due to tighter security protocols, while other enterprises that don’t implement the new 3DS2 requirements leave themselves open to the fraudsters. The ever-increasing volume of mobile use and payments is one particular area of concern when it comes to certain aspects of security. 

None of this is ideal but I think it is rather inevitable and something that comes with such change. There are teething problems with anything like this but after a short period of time, things will settle down.

And once Europe has implemented these new regulations and things shall we say stabilise, you will see online criminals increasingly abandon their illegal activities on the European continent and shift their attention to easier pickings elsewhere in the world, especially in the developing world and in less regulated economies such as in North America. 

Overall though, the best way to ensure your company’s online security is to use the latest state-of-the-art risk management technology. This uses artificial intelligence and transaction fingerprints processed through anti-fraud filter systems, set up and tailored to each merchant.

With all suspicious activity flagged and then manually reviewed, this makes it extremely hard for the online criminals of this world to succeed. By partnering with one of the big service providers out there, this kind of system is suddenly at your disposal, and in all likelihood, the criminals will be forced to look elsewhere. 

Fighting continually-evolving online crime is a battle that never ends but by adapting to their new tactics quickly and implementing comprehensive risk management systems, we can mitigate or eliminate the threats.