Digital Identity Verification: Bolstering Ecommerce Security Against Rising Fraud Threats

Posted in Know Your Customer (KYC) on May 23, 2024
Digital Identity Verification

Digital identity verification has emerged as a linchpin in the rapidly evolving digital landscape, bridging the gap between online operations and trustworthiness.

As more services transition online, from banking to healthcare, ensuring that a user is who they claim to be becomes paramount. This process, beyond just securing transactions, underpins the safety of personal data, helps combat fraudulent activities, and fortifies regulatory compliance.

Leveraging advanced technologies such as artificial intelligence, biometrics, and blockchain, modern identity verification platforms are equipped to provide quick yet robust validations. Yet, as we embrace this technology, it’s essential to address inherent challenges like data privacy and potential biases to foster a more secure and inclusive digital future.

Digital Identity Verification

Digital Identity Verification

In this digitalization business environment, buying and selling have become user friendly than ever before, however, some questions remain regarding security and fraud. 

With the ever-increasing growth in ecommerce globally, there are breaches observed in online transactions which have led retailers to worry about business security. Higher product sales now come with higher numbers of imposters. That being said, there are proven solutions to encountering imposter threats via verification of user identity. 

Digital identity verification is an important part of retailers’ arsenal in the fight against identity fraud, making it possible to quickly spot and stop fraudsters in their tracks while delivering the frictionless experience that customers demand when making purchases online or via mobile apps. 

Ecommerce serves as a command center for merchants and consumers, allowing them to control trades, payments, and marketing. A large number of physical outlets (especially the bigger ones) have shifted to ecommerce to supplement their store sales with new online orders, reaching a bigger audience. The convenience that comes with eCommerce has made it a core business operation for retailers.

The ecommerce sector is a top target for fraudsters, who are increasingly using false or stolen identities to target online transactions. Threats include payment card fraud, account takeovers, and phishing attacks, where fraudsters impersonate retailer messages to access shoppers’ accounts.   

The fraudsters adapted swiftly, advancing their capabilities and targeting online transactions more aggressively. In particular, fraudsters made greater use of phishing, identity theft, and ransomware attacks to target businesses and consumers transacting online. Faced with the increasing scale of identity fraud, the e-commerce sector has had to double down on its efforts to ensure that transactions are secure and customers are genuine.

The e-Commerce businesses need to ensure that the contextual data, such as the user’s IP addresses and device information are also used to verify the identity. For instance, by requiring extra ID checks when a shopper’s account is accessed from a new device or location. Often, shoppers will be asked to provide proof of identity. This could be by typing in a unique security code sent to a known and verified e-mail address or mobile device.  

There are several other important moments when online stores may be required to verify a customer’s identity. Some of the most common include when shoppers open an account, make a high-value purchase, or attempt to buy age-restricted products, such as alcohol.

Digital Identity Verification

Final Thoughts

In the burgeoning digital era, while the convenience and accessibility of ecommerce have transformed business operations and broadened market reach, it’s accompanied by escalating threats of fraud and security breaches. The transition to online platforms has undeniably made trade more user-centric, yet the mounting sophistication of fraudsters, employing tactics like phishing and ransomware, underscores the imperative for robust digital identity verification. As the e-commerce sector grapples with these challenges, harnessing contextual data, coupled with adaptive verification processes—like unique security codes sent to verified devices—emerges as a critical bulwark against impersonation and identity theft, ensuring both secure transactions and a seamless customer experience.