Mobile commerce is the latest big development in e-commerce. So it’s not surprising that nearly all companies engaged in e-commerce expect their mobile sales revenues to grow significantly over the next three to five years.
In fact, a new survey of ~250 such organizations conducted by IT services firm J. Gold Associates, Inc. finds that half of them anticipate their mobile revenue growth to be between 10% and 50% over the next three years.
Another 30% of the companies surveyed expect even bigger growth: between 50% and 100% over the period.
So … how could there be any sort of negative aspect to this news?
One word: Fraud.
Fraud in e-commerce is already with us, of course. For mobile purchases made now, a third of the organizations surveyed by Gold Associates reported that fraud losses account for about 5% of their total mobile-generated revenues.
For an unlucky 15% of respondents, fraud makes up around 10% of their mobile revenues.
And for an even more miserable 15%, the fraud losses are a whopping 25% of their total mobile revenues.
Risk management firm LexisNexis Risk Solutions has also been crunching the numbers on e-commerce fraud. It’s found that mobile fraud grew at a 70% rate between 2013 and 2014.
That’s a disproportionately high rate, as it turns out, because mobile commerce makes up ~21% of all fraudulent transactions tracked by LexisNexis, even though mobile makes up only ~14% of all e-commerce transactions.
The propensity for fraud to happen in mobile commerce is likely related to the dynamics of mobile communications. Unlike desktops, laptops and tablets, “throwaway” phone devices are a fact of life, as are the plethora of carriers — some of them distinctly less reputable than others.
Some of the data attributes that are and will continue to be the subject of real-time scrutiny include the following “red flags”:
> A phone number being assigned to non-contracted carrier instead of a contracted one means the propensity for fraud is higher.
> Mobile traffic derived from subprime offers could be a fraud breeding-ground.
> Multiple cellphones (five or more) associated with the same physical address can be a strong indicator of throwaway phones and fraudulent activity.
The question is whether this degree of monitoring will be sufficient to keep the incidence of mobile fraud from “exploding” – to use Gold Associates’ dramatic adjective.
I think the jury’s out on that one … but what do you think?