As our smartphones become a gateway to virtually any errand that we might need to run, online transactions are on the rise. Parallel to this, online fraud is also growing, so be vigilant as you go about your Christmas e-shopping. Ferenc Biró, partner at EY Hungary’s forensic services discusses the latest online fraud sentiment with the Budapest Business Journal.
Smartphone usage is increasing so fast that, currently, smart devices and mobile phones are predominantly used for both online shopping and personal banking. The size of online shops and ease of access to digital marketplaces create fertile virtual soil for online fraud, which has grown into the most widespread forms of misconduct, and it is expected to expand further.
“Current estimates for 2020 are prognosticating 150% to 300% increase in e-commerce fraud. The most common types of schemes affecting buyer and merchant likewise include credit card fraud, identity theft, chargebacks, and false returns,” Biró tells the BBJ.
More than 80% of consumers trust that businesses are taking appropriate steps to protect their personal information, while the majority of businesses and business executives see fraud as a growing concern: more than 60% report the same or higher levels of fraudulent activity compared to last year, according to EY figures.
“A clear majority involves the use of card details that have been fraudulently obtained through methods such as unsolicited emails or telephone calls, or via digital attacks such as malware and data hacks,” Biró says.
“The card details are then used to undertake fraudulent purchases over the internet. We see ‘Buy online and pick up in-store’ on the rise. From the consumers’ perspective online auctions and fake retailer websites pose the greatest threat,” the expert says.
With such crimes on the rise, it is becoming more important than ever that consumers are alert and take precautionary steps to protect themselves. Prior to an online purchase, it is highly advised that the buyer researches both the product and the merchant.
Validating a seller by browsing through the online reviews, as well as checking privacy policies, return rights and consumer rights are all steps worth considering.
Digitally, a seller should be aware of the security level of the website they are browsing. Secured websites that are SSL certified (either there is a tiny padlock before the web address or it starts with https:// prefix) encrypt communication between the buyer and the seller, making it extremely difficult for hackers to hijack and decipher confidential payment data.
Additionally, it is handy to have disposable, prepaid or virtual debit/credit cards, which are easy to obtain through smartphone-based financial technology service providers, such as Revolut or TransferWise.
Today, businesses, non-governmental organizations and industry associations are all running on and offline educational campaigns to increase awareness, yet there is still a long way to go.
“As a bottom line: nothing replaces a basic understanding of how online transactions work and common sense. If a deal sounds too good to be true, usually it is. Be skeptical,” Biró warns.
Despite the risks associated with online purchases, the rapid expansion of the field looks certain to continue. E-commerce’s share in the total economy is expected to rise both in terms of value and in volume of transactions.
“The real currency within e-commerce will be trust. Businesses and executives have to strive for a balance between online experience, ease of access and purchase and security protocols. Protocols that not only make customers feel safe but also protect their personal information while effectively safeguarding the business,” Biró concludes.
EY conducts its Global Fraud Survey in every second year. When Hungarian business leaders were quizzed in early 2018, only 10% said they would ask for the deletion of their personal data stored by businesses, while almost half of the companies said at the time that they were not ready to delete such data — an obligation set out by the European Union’s General Data Protection Regulation (GDPR).
In relation to their own personal data, Hungarians were shown to be less conscious about businesses handling their personal data, when compared to other countries regionally or globally.
“Our experiences show that domestically many people do not know exactly how the regulation affects them […] As every company deals with information of varying types and amounts, it is crucial that they take the steps that are relevant to their businesses only, avoiding extra and unnecessary costs,” Biró said at the time of last year’s suvrey.
With 2020 just around the corner and with the promise of increasing transactions, both in number and weight, hopefully EY’s Global Fraud Survey due next year will reveal more awareness on the side of consumers.