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Cyber fraud imperils PH digital economy

FRAUD attacks threaten the e-commerce sector in the Philippines amid the pandemic—but a digital expert warned these do more harm than just revenue losses.

The recent surge in e-commerce transactions and spending has prompted an “aggressive increase” in cyber attacks globally, Vesta Asia Pacific General Manager Shabab Muhaddes told the Business Mirror.

Vesta, a global fraud detection company, noted that payment fraud attempts in the Southeast Asian region are 12 times more than the global average. This has resulted in online merchants losing an average of 1.6 percent in their revenues annually.

“While direct fraud loss—the amount that was fraudulently used for the purchase—makes up a significant component of the total cost of fraud, it’s also the catalyst for loss in other operational areas of their business,” Muhaddes stressed.

The Vesta official is referring to consumer trust and brand reputation, which can take a hit because of the fraud attacks. The consumers, he said, may see the online payment options as not secured because of the cyber threat.

“Not only will consumers refuse to interact with the SMEs [small and medium enterprises] and online retailers in the future, they are also likely to tell others about their experience. This can quickly result in a significant amount of lost revenue,” he explained.

Card-not-present (CNP) scam is among the common types of payment fraud the SMEs and online retailers have to deal with, Muhaddes said.

This refers to illegal purchases on e-commerce platforms using stolen payment information, he explained. CNP fraud, as suggested by the term, may take place even without physical cards.

Another payment fraud cited by the Vesta official is account takeover, which is a form of identity theft.

“A successful account takeover attack leads to fraudulent transactions and unauthorized shopping from the victim’s compromised account,” he said, noting that a fraudster, in this case, illegally obtains access to bank, e-commerce site or mobile wallet accounts.

To better handle cyber security, Muhaddes said the companies need to “work with technology partners that can calibrate in real-time between good and bad transactions, drawing on trillions of data points, leveraging behavioral, device, and fraud link analysis to improve performance,” he explained. Business Mirror