The risks of mobile fraud
April 30, 2015

Mobile payments of all kinds are taking off around the U.S. While mobile point-of-sale systems and other technology are largely beneficial to retailers and consumers, these solutions create new security concerns for all parties.

The "2015 Mobile Payments & Fraud Survey" from The Fraud Practice, Kount​, Inc. and found merchants are not implementing new systems at the same rate that mobile fraud has increased in the past year. Cybercriminals have found new ways to infiltrate POS systems as new channels have emerged, but many retailers have not updated their security systems. The report revealed a lack of consistency regarding security across different industries.

"The data shows that the industry as a whole is further behind on mobile adoption and fraud protection than they were a year ago, and in fact, some are even pulling back from it," said Don Bush, Kount's vice president of marketing. "It seems everyone knows that mobile is finally poised to make an impact, but the urgency to make sure mobile fraud protection is in place is lacking. To successfully support the growth of mobile, organizations must first ensure IT departments are talking with fraud teams to understand risks and rewards or mobile fraud will grow to a bigger issue in the coming years."

Technology helps stop fraud
Mobile fraud is a multipronged issue. Not only has it been difficult for small retailers to keep pace with developments, but also some card issuers may not have considered how credit cards would function in a mobile environment, according to Mobile Payments Today. Fortunately, technology developments may help cut down on mobile fraud.

Electronic signatures have improved and are easier to cross-reference with online databases, making it more difficult for someone to forge a signature. In addition, mobile POS systems help merchants protect themselves against fraudulent transactions. For example, this technology makes it harder for cybercriminals to forge an electronic receipt. Emailed receipts are commonly used in mobile POS transactions, and in the past, it was easier for people to return to a store with a fake, duplicated or altered receipt. Now merchants can verify e-receipts by scanning a QR code and checking the transaction against their databases. This step helps protect retailers from financial losses.

As mobile continues to be adopted by businesses and consumers, retailers will need to consider their security levels to better protect against cyberthreats.

Nexus: G-WEBCD6