Mobile Fraud Set to 'Explode'

Mobile commerce is growing by leaps and bounds, which is great news. Still, there’s a dark side to this trend, as it will also offer opportunities for criminals to defraud companies. Indeed, business losses due to mobile fraud are going to “explode” over the next couple of years, according to a new study by J. Gold Associates, which surveyed 250 organizations about their mobile activities and plans through 2020.

On the positive side, half of the organizations surveyed said they expect mobile revenues to grow between 11% and 50% over the next three years, while 30% believe revenues will grow 51% to 100%. The total volume of mobile transactions is expected to grow 47% over the next five years.

Here endeth the good news. Moving on to the bad, mobile fraud is already well-established and has a significant impact on the bottom line, with 34% of organizations reporting losses of around 5% of total mobile revenues, 14% losing around 10%, and 15% losing 25%. Looking at the big picture, respondents estimated mobile fraud consumed 3% of their companies’ total revenues.

Meanwhile, 19% of organizations said anywhere from 20% to 49% of fraudulent activity is carried out via mobile devices -- and these figures are expected to double over the next two to three years.

In January, LexisNexis Risk Solutions calculated that the volume of fraudulent transactions carried out via mobile increased from 0.8% of total mobile commerce revenues in 2013 to 1.36% in 2014, a year-over-year increase of 70%. Mobile fraud is growing disproportionately, according to the same report, as mobile commerce made up 21% of all fraudulent transactions tracked by LexisNexis, even though mobile commerce contributes just 14% of all transactions.

1 comment about "Mobile Fraud Set to 'Explode'".
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  1. Leland Kroll from Kroll Direct Marketing, Inc., February 24, 2015 at 2:59 p.m.

    Over the past eight years, we have looked very closely at the composition and source of cell phone data in order to help reduce fraud via mobile devices.

    There is a significant amount of information that can be obtained and analyzed from an individual's cell phone number and actions that the consumer has taken in order to help reduce fraud. For example, here are a samplling of the the following data attributes we look at on a daily and in real-time basis:
    - Is the number assigned to a contracted or non-contracted carrier? Consumers with a phone that is sourced from a non-contracted carrier could be an indicator of increased fraudulent activities.
    - Mobile traffic derived from subprime offers can also be a source of fraud being conducted.
    - Multiple cell phones (7+) located at the same physical address can also be a very strong indicator of "throw away" phones where fraudulent activities may be taking place that can be monitored.

    There are steps that companies can take in order to conduct a verification process and take steps to protect themselves from increased fraud on mobile devices.

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