SecurityBrief Australia logo
Australia's leading source of cybersecurity and cyber-attack news
Story image

How can Australian merchants turn the tide on CNP fraud?

By Contributor
Tue 2 Oct 2018
FYI, this story is more than a year old

An staggering $476 million has been lost to fraud by Australian merchants over the last 12 months, thanks to the deployment of more innovative fraud methods by criminals. 

A sophisticated new generation of fraudsters are no longer content with physical theft or simple card skimming. This threat manifests itself as “card not present” (CNP) fraud on eCommerce channels, where methods like identity theft, account takeover data breaches and bust-out scams are employed.

Accounting for some 78% of all payment fraud in Australia, CNP fraud has pushed the country’s fraud rate to record levels. 

The good news is Australian consumers are not liable for fraud losses and will be refunded as long as they can demonstrate they have maintained a standard of care with their confidential data.

However, CNP fraud can have a huge impact on a business, putting their profit margins and long-term reputation on the line as losses are often sheeted back to merchants in Australia – worrying the ASIC and the RBA. 

So, why has CNP fraud reached such critical levels in Australia? For starters, businesses entering the online market may not have the right tools to fully protect themselves against cybercriminals.

This means there are gaps in their defences that fraudsters exploit all too easily. At the same time, consumers’ personal banking data can be compromised in a matter of minutes simply by targeting their mobile phones. 

Another significant contributing factor is email. It’s the gateway to most consumers’ online accounts; and carries with it a wealth of untapped data. Nowadays, criminals can easily get their hands on email addresses from the dark web at little cost, or they simply create ones which appear to be legitimate. 

Why aren’t businesses taking action? 

So, what’s holding businesses back from shoring up holes in eCommerce fraud defences? 

With fraud rates in Australia accounting for 7.5 cents per $100, many merchants struggle to find the right balance between the robust digital identity verification needed to prevent fraud, while minimising friction in the payment experience for consumers.  

Businesses fear adding too many layers of fraud prevention to the payment process can frustrate consumers – if they have to jump through too many hoops to order something online, consumers will simply abandon their shopping cart and shop elsewhere. This, of course, reduces conversion rates, impacting on merchants’ sales and profit margins. 

Another barrier is the perceived cost of fraud prevention solutions. It’s a misconception that integrating these systems is a costly and complex process. In fact, by prioritising investment in smart systems, businesses can increase profit margins through approving more transactions.

At the same time, they can also help avert huge financial disasters from fraud – the cost of a new fraud prevention system is far outweighed by the losses from one successful fraud incident. 

Why should businesses invest in fraud prevention?

Understandably, Australian merchants – like their counterparts all around the world – have many priorities when it comes to optimising day-to-day operations. Preventing fraud is not always at the top of the list. This leads to a reliance on sub-standard fraud prevention mechanisms, heavy on manual effort to face today’s sophisticated and increasingly automated fraud threats.

The time needed to manually analyse customers and verify orders means many businesses are unable to devote their attention to other aspects of their operations, impeding growth.  Most importantly of all though, failure to balance the fraud prevention equation can undermine a merchant’s reputation – nationally and globally. If consumers can’t trust a business to keep their hard-earned cash safe, they will shop elsewhere. 

This is a particularly important point for Australia’s smaller retailers, given that they rely on word of mouth referrals and positive online reviews to generate new customers. 

How can we build better defences?

It’s important to build a clear picture of who’s behind a transaction. Verifying only standard transaction data, such as name or address, leaves easily exploitable gaps and contributes to a higher fraud exposure level.

For the fraudster, impersonating a real customer’s behavior patterns and history is too complicated and cannot be employed at a scalable level. As a result, fraudsters use the most common method of tackling this issue: farming fake email addresses and establishing “sleeping cell” accounts to be exploited at a later date. To fight back against these threats, businesses need layered intelligence to counter attacks from all angles to make for a powerful defence solution, as well as a sound validation system. 

It’s important to build a clear picture of who is behind a transaction. When digital identity validation happens quickly, it allows companies to take steps to accelerate approvals, automate workflows and optimise processes.

Businesses should consider a scientific approach to stay ahead of the curve by ensuring fraud tools are powered by the latest technology. At the most basic level, businesses should opt for fraud prevention solutions that utilise machine learning. This branch of AI can monitor and evaluate data without manual analysis, minimising human error.  

The behaviour and history associated with an email address represents powerful intelligence that cannot be overlooked. This includes whether the email account is active and/or valid, the tenure and ownership of the address, and previous transactional behaviour. 

Time to protect Australian consumers

It’s undeniable online fraud poses a clear and present threat to Australian businesses. With cybercriminals becoming smarter, and fraud tools becoming more accessible than ever, it’s in a business’ best interest to protect themselves and their customers, by creating a multi-factor authentication process to increase the agreed industry security benchmark. 

The axiom by Benjamin Franklin “An ounce of prevention is worth a pound of cure” is still relevant today in relation to online businesses operating in Australia, and even globally. With AusPayNet announcing the start of an industry consultation on a new framework to mitigate fraud, businesses need to keep up with the advancement in technology and invest in better fraud prevention tools, otherwise they will be open to attack which would be detrimental to their time, reputation, and profit. 

Article by Emailage CEO Rei Carvalho.

Related stories
Top stories
Story image
Ransomware
Examining the future of ransomware threats with Vectra’s CTO
As customers' valuable data move to the cloud, so will ransomware. What is the current landscape and what do we need to know?
Story image
Apple
Your tools, your choice: why allow employees to choose their own devices?
Jamf Australia says giving your team the freedom to work with their digital device of choice could help to attract and retain top talent in a tight labour market.
Story image
Security Information and Event Management (SIEM)
LogRhythm updates SIEM Platform with latest innovations
LogRhythm has announced the launch of version 7.9 of the LogRhythm SIEM Platform and updates to LogRhythm NDR and LogRhythm UEBA.
Story image
Document Management
NZ's FileInvite raises $10M in latest investment round
FileInvite has raised $10 million in Series A investment to fast-forward the extinction of email for requesting and collecting documents online.
Story image
Research
New study reveals 51% of employees using unauthorised apps
The research shows that 92% of employees and managers in large enterprises want full control over applications, but they don't have it.
Story image
Cybersecurity
Security driving customer identity & access management adoption
"CIAM allows businesses to embed a secure identity layer into their consumer and SaaS applications, facilitating secure, seamless end user experiences."
Story image
Tech job moves
Tech job moves - Bitdefender, Cohesity, Fortinet & MODIFI
We round up all job appointments from June 27-30, 2022, in one place to keep you updated with the latest from across the tech industries.
Story image
Cybersecurity
Zero trust security adoption rises 27% in just two years
A survey of WAN managers has revealed that multi-factor authentication and single sign-on are the top zero trust features implemented.
Story image
Cybersecurity
Email threats spike 101%, remains a top attack vector
"Each year we see innovation in the threat landscape, but each year email remains a major threat to organisations."
Story image
Cybersecurity
Zscaler launches co-located data centres in Canberra and Auckland
The investment will offer public and private sector enterprises greater resilience in support of their zero trust cybersecurity posture.
Story image
Solutions
Progress launches latest version of network visibility solution
In Flowmon 12 network solution, Progress has expanded its support for public cloud provider flow log monitoring and launched new features.
Story image
Artificial Intelligence
Juniper study reveals top AI trends in APAC region
Juniper's research shows an increase in enterprise artificial intelligence adoption over the last 12 months is yielding tangible benefits to organisations.
PwC
WSLHD and PwC’s Consulting Business came together to solve through the challenges of COVID-19. A model of care was developed to the NSW Health Agency for Clinical Innovation guidelines with new technology platforms and an entirely new workforce.
Link image
Story image
Cyber Criminal
Identity and access: the fight is on
Blue team defenders are used to protecting our data, applications, and users with access controls and other security mechanisms, which is why attacks like this are especially challenging when they target identity and access control systems.
Story image
Digital Fingerprint
Decline in counterfeit cherries after digital fingerprinting
Reid Fruits says there’s been a dramatic decline in counterfeit products for its cherries over the past three export seasons to Asia because of digital fingerprinting.
Story image
Cybersecurity
Tech and data’s role in the changing face of compliance
Accenture's study found that 93% of respondents agree or strongly agree new technologies such as AI and cloud make compliance easier.
Story image
Compliance
SentinelOne integrates with Torq to empower security teams
"With Torq, security teams can extend the power of SentinelOne to systems across the organisation to benefit from a proactive security posture.”
Story image
State Library of Victoria
State Library of Victoria entrusts Oracle support and security to Rimini Street
“Our finance team are very happy with the support and security that Rimini Street provides, which keeps our assets and our customers secure."
Story image
Artificial Intelligence
Vectra AI named as AWS security competency partner
Threat detection and response company Vectra AI has announced that it has become an Amazon Web Services Security Competency Partner.
Story image
Apple
Jamf introduces new content filtering solution for education providers
Jamf has announced the launch of Jamf Safe Internet, a new offering that looks to deliver a safe online experience to students while offering better management options for admins.
Story image
Enterprise Resource Planning / ERP
Five ways your ERP is letting you down and why it's time for a change
Wiise explains while moving to a new system may seem daunting, the truth is that legacy systems could be holding your business back.
Story image
HP Inc
Firmware attacks significant threat in age of hybrid work
Changing workforce dynamics are creating new challenges for IT teams around firmware security, according to new research.
Story image
Oracle Cloud
Commvault, Oracle to deliver Metallic Data Management as a Service
"We are excited to partner with Commvault and enable our customers to restore and recover their most mission-critical cloud data."
Story image
Ransomware
Businesses unprepared to defend against ransomware attacks
Ransomware attacks continue to impact organisations worldwide with high costs, but businesses are still largely unprepared.
Story image
Remote Working
RDP attacks on the rise, Kaspersky experts offer advice
"Given that remote work is here to stay, we urge companies to seriously look into securing their remote and hybrid workforce to protect their data."
Story image
Cloudera
Overcoming hybrid and multi-cloud challenges to drive innovation
Driven by improvements in technology, financial services companies have advanced both internal and external systems and processes, with the likes of digitisation, personalisation and risk management redefining the industry.
Story image
Payroll
How New South Wales state departments achieved cloud migration success
State departments in New South Wales are heading to the cloud to achieve better workflow solutions, and one company is paving the way for their success.
Story image
Cybersecurity
Video: 10 Minute IT Jams - An update from CrowdStrike
Scott Jarkoff joins us today to discuss current trends in the cyber threat landscape, and the reporting work CrowdStrike is doing to prevent further cyber harm.
Story image
Internet of Things
ManageEngine wins big in IDC MarketScape assessment
ManageEngine's Endpoint Central service has been recognised as a leader by IDC MarketScape in several categories including Internet of Things device deployments and UEM software for SMEs.
PwC
PwC's Consulting Business and PwC's Indigenous Consulting are proud to play an important role in helping Australian Indigenous Mentoring Experience build IMAGI-NATION, a free online university for marginalised communities around the world.
Link image
Story image
Cybersecurity
Delinea’s Joseph Carson recognised with OnCon Icon Award
Delinea chief security scientist and advisory CISO Joseph Carson has been recognised as a Top 50 Information Security Professional in the 2022 OnCon Icon Awards.
Story image
API
Industry-first comprehensive risk-based API security enhances protection
Application Programming Interfaces (APIs) have become a crucial part of operating web and mobile application businesses and are causing significant economic growth in the digital sector.
Story image
Cybersecurity
FIDO Alliance releases guidelines for optimising UX with FIDO Security Keys
The new guidelines aim to accelerate multi-factor authentication deployment and adoption with FIDO security keys.
Story image
MSP
Video: 10 Minute IT Jams - An update from CyberArk
Olly Stimpson joins us today to discuss the importance of MSP programmes and how MSP partners are experiencing success with CyberArk.
Story image
Cybersecurity
Palo Alto Networks' cloud security platform receives IRAP assessment
"We provide help protect all forms of compute, cloud native services and access to data within public and private sectors."
Story image
Gartner
Gartner's top recommendations for security leaders
"Leaders now recognise that major disruption is only one crisis away. We can’t control it, but we can evolve our thinking, philosophy, program and architecture.”
Story image
WatchGuard Technologies
Ransomware volume doubled 2021 total by end of Q1 2022
Ransomware detections in the first quarter of this year doubled the total volume reported for 2021, according to a new report. 
Story image
Vendor
Forescout reveals top vulnerabilities impacting OT vendors
Forescout’s Vedere Labs has disclosed OT: ICEFALL, naming 56 vulnerabilities affecting devices from 10 operational technology vendors.
Story image
SaaS
Ping Identity appoints Deloitte Australia as a partner
Ping Identity has appointed Deloitte Australia as a Consulting Technology Partner, uniting its offerings with the company's consulting services.
Story image
Ransomware
Secureworks reveals new information on BRONZE STARLIGHT threat group
New research from Secureworks has uncovered new information on the Chinese threat group BRONZE STARLIGHT and how they are using targeted ransomware to initiate complicated attacks.
Story image
Media
Registrations for the W.Media Sydney Cloud and Datacenter Convention 2022 now open
Are you a C-Level executive looking to enhance your knowledge in the cloud and data center space in order to get the best results for your company?
Story image
Trend Micro
5G network projects driven by improving security and privacy
Trend Micro's new study reveals the prospect of improved security and privacy capabilities are the main motivations behind private 5G wireless network projects.
Story image
Cybersecurity
Without trust, your security team is dead in the water
The rise of cyberattacks has increased the need for sound security that works across any type of business, but with any change, buy-in is essential. Airwallex explains why.
Story image
Cybersecurity
Vulnerable APIs costing businesses billions every year
Large companies are particularly vulnerable to the security risks associated with exposed or unprotected APIs as they accelerate digital transformation.