Omnichannel Selling: A Critical Shift in E-Commerce Security
In today's competitive landscape, omnichannel selling is essential for organizations aiming to scale sustainably. Protecting customer identities while combating fraud is a complex challenge for online merchants and e-commerce businesses.
Adversaries, including rogue attackers and nation-states, are increasingly employing generative AI to enhance their fraudulent activities, targeting online retailers and their customers. The growth of global retail e-commerce sales, which reached an estimated $5.8 trillion in 2023 and is projected to surpass $8 trillion by 2027, fuels these attacks. Omnichannel sales, propelled by AI-driven shopping personalization, are particularly vulnerable.
Merchant losses from online payment fraud are anticipated to exceed $362 billion worldwide between 2023 and 2028, with business-to-consumer (B2C) e-commerce fraud losses growing at a compound annual growth rate (CAGR) of over 40%.
The Impact of E-Commerce Fraud on Brands
Successful fraud attacks not only result in financial losses but also severely damage brand reputation and customer trust, driving consumers to competitors. A survey by Telesign revealed that 94% of customers expect businesses to be accountable for protecting their digital privacy.
Cybercriminals are now leveraging advanced AI and automation techniques through offerings like FraudGPT, resulting in widespread account takeover schemes. According to Sift, 73% of consumers believe brands must protect against account takeover incidents. The Telesign Trust Index indicates that 44% of victims of data breaches warn friends against transacting with compromised brands, while 30% share their experiences on social media, amplifying the damage.
Innovative Solutions Against Online Fraud
Adversaries are enhancing their methodologies through tools available on the dark web, including ransomware-as-a-service and fraud kits. Strengthening Application Programming Interfaces (APIs) with AI and machine learning can safeguard identities and secure transactions across verification channels, thereby reducing fraud.
Adopting AI and machine learning enhances APIs by adding contextual intelligence and consolidating omnichannel verification into a single, streamlined process. Recognizing this need, Telesign developed their Verify API, inspired by customer insights.
In an interview, Telesign CEO Christophe Van de Weyer highlighted the efficacy of their Intelligence API, stating, “Machine learning continuously learns how fraudsters behave, analyzes user behaviors, and builds risk models. Our Intelligence API evaluates various factors such as phone numbers, email addresses, and IP addresses.”
Van de Weyer further explained how studying phone number patterns can identify red flags, enhancing risk assessments and improving authentication processes.
The Future of Omnichannel Verification with Telesign’s Verify API
Brendon O’Donovan, Telesign’s VP of GTM Strategy, discussed the innovative capabilities of the Verify API. “It seamlessly integrates with our machine learning AI products, allowing businesses to assess the risk of phone numbers before sending one-time passwords (OTPs).”
Telesign's Verify API stands out as the first omnichannel API fortified by extensive AI and ML algorithms. Key features include:
1. Integrated User Verification: Connects with seven leading verification channels—SMS, Silent Verification, Push, Email, WhatsApp, Viber, and RCS—tailoring options based on country-specific cost, experience, and reliability.
2. Real-Time AI and ML Responses: Enhances transaction security and fraud prevention through AI-driven real-time analysis.
3. Risk Assessment and Fraud Detection: Utilizes machine learning to create a phone number reputation score, evaluating various data to recommend fraud risk scores.
4. Device Anomaly Detection: Identifies potential risks based on device changes or unusual activity, enabling proactive verification measures.
5. Friction and Communication Optimization: AI assesses transaction risks to adjust verification processes accordingly, enhancing user experience without compromising security.
6. Integration with Internal Fraud Models: Supports better defenses against various fraud types by aligning with existing anti-fraud strategies.
Telesign’s Vision: Cost-effective, Secure Multichannel Messaging
During the interview, Van de Weyer emphasized how AI and ML are integral to the Verify API's framework, focusing on both fraud risk reduction and optimizing message costs.
He explained, “Verify API enables customers to set primary and fallback communication channels, ensuring controlled costs and improved user experiences based on regional preferences. Our goal is to deliver a reliable cost structure, enhanced customer interactions, and reduced fraud across all geographies.”
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