Most European Retailers Saw Fraud Rise This Year

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Some 60% of European retailers have seen an increase in fraud over the past year, despite the vast majority having prevention systems in place, according to Adyen.

The payments platform provider polled 5000 consumers and 500 retailers in the UK, Spain, France, Germany and the Nordics to compile its 2018 European retail report.

Over three-quarters said they “are prepared” for fraud or have active fraud prevention systems in place, with a majority looking to biometrics like fingerprint scanners (57%) and voice authentication (56%) to improve resilience.

However, current solutions appear to be failing given the rise in fraud across a majority of retailers surveyed. That’s bad news as consumer expectations around security grow higher.

Some 69% of European shoppers polled said they would avoid any brands hit by a data breach, for example.

The research also highlighted potential regulatory concerns in the market.

The EU’s Second Payment Service Directive (PSD2) mandates strict new authentication standards to help minimize fraud as well as implementation of 3D Secure 2.0 by 2019. However, while over 20% of retailers said they already comply and 27% are planning to in the next 12 months, nearly a quarter (24%) said they don’t have plans to do so.

“As technology makes the shopping experience more engaging and convenient, it also powers the sophisticated fraudsters. Retailers need to walk a very fine line of doing everything in their power to help prevent fraudulent transactions and protect their customers, but they also don’t want to be overly cautious and decline legitimate transactions,” explained Adyen’s UK MD, Myles Dawson.

“Payments technology is key in this regard. Machine learning and advanced data analysis plays a vital role in accurately identifying the shopper behind each transaction to reduce chargebacks and false positives.”

UK identity fraud fell in the first half of 2018 for the first time in five years, but fraud against online retail accounts rose by 24% year-on-year, alongside fraudulent applications for credit and debit cards (12%), according to Cifas.

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