E-commerce poses fraud challenge

Companies are slowly learning the problems of customers using fraudulent identities to obtain credit, but the world of e-commerce provides them with another challenge, says credit agency Baycorp general manager for group strategy Paul Stewart.

Companies are slowly learning the problems of customers using fraudulent identities to obtain credit, but the world of e-commerce provides them with another challenge, says credit agency Baycorp general manager for group strategy Paul Stewart.

"It really comes down to the processes in place to confirm the identity," says Stewart. Banking institutions have a much more rigorous procedure than a phone company for example.

"The latter has much less control in terms of verification process. It's often done over the phone so there's no physical confirmation of that person."

Stewart says that can allow customers to run up a debt and then vanish without leaving a paper trail behind.

"We estimate at Baycorp we're investigating about 100 instances a month of this sort of thing."

Stewart says there are around 80,000 false identities on credit databases in New Zealand.

"That may include one person with more than one alias, but it is a large number and that only goes back for five years."

Records aren't generally kept for longer than five years.

Stewart believes retailers who are making the leap to e-commerce have to be just as aware of false identities - if not more so.

"It's the next potential avenue for this kind of fraudulent activity," he says.

The problem of security online is so great it is acting as a constraint on e-commerce growth, says Stewart.

"This problem's not going to go away. People need to be aware of it."

Stewart does say more companies are using credit agencies like Baycorp to check on a customer's identity.

"They can check on a number of databases and see if that is their actual phone number or if they do really own the house they claim to."

Ihug's e-commerce team leader, Marko Kostryko agrees that ID fraud is becoming more of an issue, but he says e-commerce retailers are more aware of the problem.

"The rise is matched by a corresponding rise in the use of our secure servers. There are a lot of people starting to become aware of the potential risk." Kostryko says banks are also responding to the problems of security.

"We have a few customers who take advantage of the direct link to the bank systems through our secure server."

Kostryko believes banks will play a growing role in ensuring customers are who they claim to be as the burden of security shifts to them rather than to the e-commerce vendor.

Join the newsletter!

Error: Please check your email address.
Show Comments

Market Place

[]