PayPal is launching a new fraud protection tool to help merchants combat the growing problem of online fraud.
Fraud Protection Advanced is a risk management solution developed specifically to help protect mid-market and enterprise businesses from escalating digital threats and scams, PayPal announced on Monday (April 12).
“This enhanced tool is built on insights from our deep industry partnerships and more than 20 years of data harnessed from our two-sided network of both merchants and consumers across 15 billion transactions annually. With our sophisticated machine learning and analytics capabilities, we are now able to take these insights and offer them to merchants to help them identify, investigate, resolve and mitigate fraud,” said Rahul Pangam, vice president of risk strategy at PayPal.
The COVID-19 pandemic fueled rapid change in people’s shopping behavior, with eCommerce in the U.S. escalating to a record penetration high of 21.3 percent last year, up over 5 percent from 2019, according to DigitalCommerce360. The new revenue potential has been good for merchants — but it also opened up opportunities for fraudsters, leading to an escalation in digital thievery.
PayPal’s new study — “The Real Cost of Online Fraud” — done in conjunction with the Ponemon Institute, shows that the growing sophistication of digital thieves has made it hard for businesses to keep up. Other problems that trip merchants up from stopping online fraud is the lack of advanced tools or not having best practice policies in place.
The new research is intended to offer a better understanding of the current fraud landscape and the various roadblocks businesses face. More than 600 analysts and senior leaders in numerous sectors participated in the survey, including retail, travel, hospitality, and entertainment. On average, these businesses report losing $4.5 million every year due to digital fraud. Even though the financial loss has been great, just 51 percent said that their companies were working to combat it.
Participants also said that the pandemic played a big role in their inability to stop the fraud. Before COVID-19, 45 percent of respondents rated their effectiveness in reducing online fraud as high or very high. Now, just 34 percent rate their effectiveness as high or very high.
The Federal Reserve recently issued a suggested definition for synthetic identity fraud as a way to help combat the escalating digital fraud problem.
Selected by EFXA