How to protect your online retail business from the growing threat of cybercrime
- E-commerce crime is on the rise, with both the number and individual value of fraudulent purchases increasing during the pandemic
- PayPal’s latest Digitise & Thrive e-book explains how businesses can protect themselves against cybercrime
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The global pandemic has led to a boom in e-commerce as consumers embrace digital shopping channels. In Hong Kong, 50 per cent of consumers are more confident about shopping online than they were before Covid-19 struck, according to research by KPMG¹.
The surge in e-commerce has not only caught the attention of retailers, but also that of fraudsters, making the need to protect online business more important than ever.
A new breed of fraudster
While it may be tempting to assume online fraud is limited to isolated incidents conducted by hackers working alone, the reality is very different. Cybercrime is increasingly being carried out by sophisticated and coordinated networks of perpetrators.
Globally, fraudulent activities against e-commerce retailers soared by 18 per cent in 2021 compared with the previous year², while each fraudulent purchase was, on average, 70 per cent higher in value than before the pandemic³.
In Hong Kong, cybercrime resulted in HK$2.96 billion (US$380 million) of financial loss in 2020 (the latest year for which figures are available), a 2 per cent jump compared with 20194.
The increase in fraud is leading to more audacious cybercriminal activities that are smart and highly sophisticated, with cybercriminals now having greater access to the requisite technological tools.
Fraudsters’ knowledge of the mechanics of e-commerce enterprises enables them to easily identify and exploit gaps in security systems. These gaps are more likely to occur in small and medium-sized businesses (SMBs) that do not have the same fraud prevention resources as their larger counterparts.
The dual challenge
The challenge for SMBs is further exacerbated by what can appear to be conflicting customer demands. Online shoppers expect e-commerce sites to have watertight security, yet they want a fast and frictionless experience.
If the process takes too long or security leads to a cumbersome customer experience, they simply go elsewhere. Customers are increasingly using their smartphones to access digital platforms, but as they migrate to mobile channels so do fraudsters, with the mobile attack rate reaching 24 per cent in the first half of 20215.
Staying one step ahead of the cybercriminals
The growth of e-commerce has prioritised the need for businesses to protect themselves from cybercrime; understanding the vulnerabilities of a business and the resources to identify, respond or prevent attack is critical. Building security features into an online business may seem daunting, so what should you do to protect it from cybercrime?
Watch out for suspicious activity
Monitor the online site for any suspicious activity, such as excessive chargebacks or unusual buyer activity, including undeliverable emails and unusually large orders, all of which could indicate unwanted, third-party activity. The PayPal Commerce Platform’s fraud prevention technology, which uses machine learning to adapt to business needs, can help identify suspicious transactions.
Stop cybercrime at checkout
According to research by FIS Global6, nearly six out of 10 businesses have seen an increase in fraud due to card-not-present transactions. Despite the risk, many SMBs struggle to put effective payment security solutions in place that could stop cybercrime at checkout.
Encrypt data to keep payments safe
Unencrypted data makes life easy for cybercriminals, giving them access to customers’ credit card details, passwords and other information. With fraudsters on the lookout for easy pickings, it is important to protect data using technology that converts it into secret code. Companies can take this one step further by using technologies such as PayPal’s strong transport layer security configurations.
Update your software
Running outdated software makes it easy for cybercriminals to hack into systems. Providers are constantly updating their systems to stay ahead of the latest threats, viruses and malware. Keeping operating systems up-to-date is one of the simplest ways of protecting your business.
Know your blind spots
While cybercriminals may use the latest technology to commit fraud, they can also behave like old-school pickpockets, targeting businesses when they are most distracted - they often strike on high traffic days, for example during peak seasonal shopping events. The best protection is to be informed and prepared – know the vulnerable spots and be on guard.