US point of sale compliance important for e-commerce
October 15, 2013
With the rise of e-commerce, companies need to comply with U.S. retail legislation. As firms adopt new technologies, they need solutions that will help them avoid payment fraud and adhere to U.S. point of sale compliance.
A recent online poll from Deloitte revealed e-commerce and preventing payment fraud were top of the list of concerns for consumer-facing organizations. However, despite these priorities, only 9 percent of companies are providing customers with tools to prevent fraud. Budget increases for fraud protection have been small in the past 12 months. A minimal amount of organizations had boosted their fraud detection budgets in the same period.
"Along with the positive impact of digital commerce comes the risk of fraud to businesses and customers," said David Williams, chief executive officer of Deloitte Financial Advisory Services. "With monthly phishing attacks increasing 40 percent last year, education and fraud solutions for the end-customer are often a powerful way for organizations to police and control fraud."
How organizations can protect themselves and customers from fraud
According to a study from LexisNexis, between 10 and 14 million American consumers are the victims of identity fraud every year, and 1 in 3 of these people choose not to shop with retailers that have placed them in financial danger again. Although fraud can cause financial damages for customers, merchants are liable as well because they incur chargebacks for fraudulent spending, plus they also may be required to pay fees and interest to financial institutions. Retailers also have costs from replacing and redistributing lost or stolen merchandise purchased fraudulently. The expenses can be significant for consumers and companies. In fact, the study found identity fraud increased by 5 percent in 2013, and e-commerce merchants that were not taking a robust approach to fraud prevention were experiencing a higher rate of incidents.
E-commerce vendors can collaborate with their payment service providers to take active steps in fraud prevention. When conducting transactions online, companies can utilize address verification services, which check the customer's address against the bank's records, The Hosting News stated. Retailers should also require CVC2 and CVV2 verification. Since cybercriminals can sometimes acquire a customer's credit card number without having the physical card, and asking for the three-digit code from the back can eliminate transactions from being successful.
Since ecommerce continues to grow in popularity, retailers may have additional concerns for U.S. retail compliance.