With the chip-card technology being rolled out in retail stores nationwide and reducing fraud in physical stores, online fraud has risen. A third of the 50 largest retailers in the U.S. has then seen a 30% increase in online fraud.
As a result, retailers as big as Macys and as small as Audeze rely on third party data-mining firms to combat fraud, such as people making purchases with stolen credit cards or falsely claiming a purchase as fraudulent.
These firms use big data to evaluate whether a shopper is making a fraudulent transaction based on that person’s online browsing behaviors, transaction data and geolocation information. The firms will then decide whether to approve or deny the transaction at the time of purchase.
Online behaviors such as paying for the latest shipping method or making a purchase without checking the return policy are sometimes considered as signs of fraud. And oftentimes, falsely declined customers would not even know why they were declined for a transaction.
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Source: Wall Street Journal