Mobile fraud poses $240M threat

Mobile may be a growth vehicle for retail sales, but it's also a contributor to growing fraud and security issues. According to new research, "enterprises have reported up to $240 million in annual losses each due to mobile fraud, despite asserting they have adequate systems in place for detection and remediation."

"The growth of mobile interactions is expected to increase the percentage of mobile incidents significantly," according to a survey and report from TeleSign and RSA, the security division of EMC. "More than 50 percent of respondents believe that mobile revenues will grow 11 to 50 percent over the next three years, and 30 percent believe it will grow 51 to 100 percent."

And the risk of fraud grows along with it.

Currently, 19 percent of companies said that 25 to 49 percent of their fraud incidents are due to mobile. "These rates are expected to grow, and in some cases at least double over the next two to three years as mobile revenue contributions increase, unless significant remedial actions are implemented quickly," according to the report.

"An uptick in online fraud resulting from today's environment of large-scale data breaches and security incidents is something TeleSign is seeing first-hand," said Steve Jillings, CEO of TeleSign. "Illicit activities including spamming, phishing attempts, affiliate fraud and e-commerce fraud all have a common primary motivation: money."

The web-based survey of 250 organizations with average revenue of $2.54 billion gathered insights on the growth of mobile e-commerce and the accompanying fraud issues. According to the repot, a growing number of consumers "now interact with the internet primarily through mobile devices and this shift has a profound impact for organizations with an online presence and how they regard cyber security, loss prevention and fraud."

"With the shift to mobile e-commerce well underway, we know that hackers and fraud are never far behind," said Jillings. "This report has businesses expecting a 47 percent growth rate in mobile revenues over the next few years. We believe this represents a green field for fraud incidents if security postures remain the same."

Retailers are investing in mobile, but many aren't investing in the security measures needed to protect this channel. "One in four businesses currently don't require login identification for mobile users," the report said.

"Mobile security has huge payback, likely returning 10 to 20 times or more of the investment," said Jack Gold, founder and principal analyst at J.Gold Associates. "On the flipside, companies who fail to make the required investment in enhanced mobile security will not only have sharply reduced revenues, but their operation costs will be much higher. A major finding from this report is that in the next two to three years, next generation authentication technologies like biometrics, soft tokens and other two factor authentication will largely replace the user name and password as the primary method of authentication."

For more:
-See this Telesign report

Related stories:
M-commerce increases need for fraud prevention
The cost of ignoring mobile payment fraud
Mobile retail payments grow 36%
Amazon buys mobile payments startup
PayPal expands e-commerce, mobile payments

Suggested Articles

Costco changes up its menu items, and Alibaba and Guess partner for a physical store.

Janey Whiteside, Walmart's new chief customer officer, is well acquainted with the importance of customer service in modern retail.

Whole Foods will offer deals on Amazon's Prime Day, and tariffs against China are causing pricing hikes.