Amazon, Ali Baba, eBay, and other such giants are making digital platforms a go-to option for customers in the majority of their retail needs. While online shopping and payments may seem convenient, they also involve several risks such as the exploitation of information stored within records of stores. Furthermore, criminals commit synthetic identity fraud to impersonate legitimate buyers and make purchases under their names. This helps them escape identity verification checks.
Despite the increasing fraud risks, there is a surge in retail sales from $26 trillion in 2021 to $27.33 trillion by the end of 2022. This requires e-commerce sites to integrate efficient identity verification services to safeguard their operations and clients’ information. This blog covers the benefits that ID verification solutions provide to the retail sector.
Countering E-Commerce Issues with Efficient Authentication of ID
Online shopping is the new trend among masses as it is more convenient, cost-effective, and eliminates the hassle of visiting physical stores. While they open doors to global customers, e-commerce sites also attract more fraud. Payment scams, false chargeback claims, inaccurate deliveries, and camouflaged purchases expose e-commerce stores to regulatory scrutiny. Due to inefficiencies in the authentication of ID, global regulatory bodies have made Legal authorities have made Know Your Customer (KYC) a legal obligation for online retailers.
Fraudsters identify loopholes in e-commerce digital onboarding mechanisms and conceal their dirty money. Inadequate identity verification further paves the way for high-value illicit purchases. Spooging, deepfake, and other such attempts are other methods that help fraudsters exploit retailers. However, AI-powered digital ID checks provide Knowledge-Based Authentication (KBA) to validate customers’ claims.
Online retail shops that offer age-restricted products or services such as tobacco, liquor, and website membership equally require robust validation of identity. This way, they can ensure the buyers fall under the legal age limit.
Criminals are adopting the latest technology trends and coming up with advanced fraud techniques that make their illicit actions undetectable. Spoofing, phishing, and ransomware attacks are some common examples. Hence, e-commerce sites will experience a spike in fraudulent purchases in the upcoming years.
To counter illicit actions, online retailers need to integrate robust digital ID checks that will leave no room for fraudulent purchases. Furthermore, they can improve customer experience and prevent chargebacks. As per KYC regulations, carrying out identity verification and validating payments is a legal requirement. Hence, e-commerce sites should double down their fraud prevention efforts to meet regulatory compliance.
AI-powered identity verification services will mitigate fraudulent onboarding and enable online retailers to increase prevention against criminals by employing real-time facial feature analysis.
Benefits of Integrating Identity Verification Services
Retailers are moving their services online to assist buyers in a better way. They use advanced technologies to streamline customer onboarding and offer real-time selfie-based analyses to ensure the buyer is present at time of making a purchase. AI-powered digital ID checks further help retail stores to deter external breaches, prevent account takeovers, validate payments, and ensure accurate deliveries.
E-commerce sites can reap additional security benefits without investing huge amounts of resources as global digital identity verification solutions are easily integrable. AI-powered IDV tools help retailers offer a hassle-free, frictionless, and enhanced shopping experience amid digitisation. Further benefits of incorporating online identity verification services involve the following:
Prevents Account Takeover Fraud
Safeguarding customers from risk of account takeover fraud is a crucial task for online retailers along with improving experience and convenience. This is because criminals can hack legitimate profiles to place orders for restricted products such as drugs or arms and make payments under someone else’s name. The use of counterfeit information helps fraudsters achieve their malicious goals.
E-commerce stores can overcome account takeovers by adding extra layers of fraud control with identity verification solutions. AI-powered digital ID checks authenticate not only Card Not Present (CNP) payments but also increase profile security by deploying biometric analysis.
Generates Revenues with Chargeback Reduction
False chargebacks, payment scams, and use of counterfeit information are increasing with digital innovations in the e-commerce sectors. While these attempts push this industry to create economic instability, AI-powered identity verification services help barricade them. Validating addresses through geo-tagging, real-time selfie-based verification for payments, and information cross-checks in online stores can forestall additional financial losses.
Summarising the Facts
Fraudsters are deploying a number of techniques such as identity theft to reap illicit benefits from e-commerce services. Imposters deploy advanced phishing and spoofing techniques that in return, leave online retailers with huge monetary and reputational losses. Consumer drop-off, compliance risks, and competitive instability are other severe consequences.
E-commerce sites need to incorporate digital ID checks amid increasing danger of illicit activities. With real-time identification, payment authorisation through facial features, and other robust IDV services, they can differentiate between potential buyers and fraudsters.