The world of Mobile Retail is moving faster than the standards and solutions to prevent its fraudulent abuse according to business and revenue assurance experts WeDo Technologies.
More retailers are identifying the potential revenue streams by using smartphones as a means of ‘app currency’ to purchase or redeem items and also as a means of re-energising the High Street experience. However, few are taking equal care over the security risks of its application and the associated brand damage caused by fraudulent voucher sales, rogue purchase or stolen identities through near field communication (NFC), or mobile commerce enabled phones used for voucher redemption or payments.
Millions of vouchers and transactions are being processed daily from mobiles without tight security controls. In addition, NFC enabled phones are now starting to offer the ability to pay and transact, but retailers face a future of unknown levels of fraud while younger, ‘digital native’ criminals exploit confusion over the technology, exploit the business processes and the lack of adequately targeted fraud protection towards the mobile world .
Figures reveal that by 2016, £27 billion will have been redeemed against electronic coupons or vouchers on mobile phones, and the market is also potentially huge for mobile fraud.
Currently, protection against mobile fraud requires the redeemer and the phone to be visible to the merchant at the point of purchase, but this process has its own inherent risks.
“We could be looking at a very significant level of potential ‘walk by’ thefts as consumers leave their app open at the cash register, or other locations. It is a huge educational piece for retailers who face major brand reputational damage if they roll out M-Money and transactional capability that may well take account of the risks in technology but fail to understand the abuse of the services and processes used by criminals,” warns Simon Collins, Director of Praesidium, WeDo Technologies’ business consulting division.
“We have for a long time operated in the revenue assurance field all around the world, but the reason we have expanded our offering into the UK retail space is because of the speed of take up of mCommerce and the potential for huge profit leakage linked to these relatively new and so-far roughly tested transaction and payment modes,” he said.
Collins urges retailers to tread carefully in terms of the inherent risks when introducing mobile transaction technology into their business.
“Brand reputations take years to build, but seconds to destroy. If an established UK retailer rushes into the busy mobile space without carrying out due diligence fully on the risks involved, it could be their reputation that is damaged both in the short and the long-term. It only takes one customer to become a victim of a walk by theft, for example, to have a far-reaching impact upon a retailer if they are found to be wanting in relation to conducting risk assessments of the technology or fail to have put in place a robust anti-fraud solution to combat these cyber assaults.”
His warning carries resonance because this cyber threat is no longer against accounts on personal computers. Mobile devices are used in every location, on the move, from home and in-store. Many retailers themselves will be using iPad technology to identify stock discrepancies for customers, order the product to send to their home and process the payments – and all away from the traditional cash desk.
“This introduces a huge element of convenience and enhances the shopping experience for the customer, but it exposes the retailer to unscrupulous practices both technical and from a social engineering aspect that they may not be aware are going on in the brave new world of mobile transactions and with NFC,” added Collins.
About Paul Bessant
