Why Fraudsters Are Loving the Post-Pandemic Retail Reality

As social distancing measures remain intact across the country, contactless shopping has become the consumer’s lifeline. With curbside pickup surging 208 percent in April, consumers flocked to a variety of services such as DoorDash, Instacart, Shipt, and Walmart Grocery for their shopping needs. With essential items top of mind and convenience being a close second, it's clear that our newfound shopping behaviors will stick around for the long term — even after retailers fully reopen and social distancing subsides.

Despite their benefit, some of these services do have disadvantages as consumers and merchants are blindsided when it comes to digital security awareness, as evident by recent research that uncovered startling revelations about consumers’ lack of security awareness during the COVID-19 crisis.

With retailers beginning to reopen their doors and fraud continuing to escalate, business owners need to double-down on providing a cohesive customer experience no matter how they shop, protecting their personal data while driving growth in the process. Here’s how retailers can eliminate these pain points in a post-pandemic marketplace.

A False Sense of Security in the U.S.

As medical experts repeatedly told us we’re safer at home, the pandemic encouraged consumers to use mobile apps for food and groceries that they otherwise may not have, indicating their penchant for convenience. Instacart, Shipt, Target, and Walmart Grocery announced surges of 218 percent, 160 percent, 98 percent, and 124 percent in respective app downloads. This is understandable as consumers preferred minimal contact during the social distancing period. However, this uptick in activity signifies a change in users' digital behaviors, which serve as a major indicator to fraudsters that an open opportunity for hacking may be on the horizon, triggering an increase of fraud exchange of security for convenience fails to cross the consumer’s mind.

With nearly three out of four Americans considering their online shopping transactions secure, there's a real sense of complacency, and a complete disregard for security is apparent. Given consumers most likely have a high number of online shopping accounts (with the same password, in most cases) that store their critical personal data, this information can easily become available for cybercriminals. These fraudsters now have the ability to implement elaborate scams to access consumers’ accounts, bypassing standard security measures. The result is a significant amount of fraudulent activity and possible financial ruin.

Retailers and consumers aren't defenseless, however. Merchants can protect themselves and their customers by updating and implementing more stringent digital identity and authentication practices. Adding multifactor authentication and mobile device fingerprinting not only helps bolster security and prevent fraud, but helps remove friction while providing peace of mind to consumers in our new digital-physical retail experience.

Poor Customer Experiences Are Ruining Customer Loyalty

Before the apex of the pandemic occurred, consumers were in hot pursuit of essential items such as toilet paper and hand sanitizer, wiping out retailer shelves as well as most online marketplaces, resulting in a considerable strain on supplies. As desperation mounted, users turned to nonvetted third-party applications to nab these essentials. These buyers were welcomed by subpar user experiences and poor security. As a result, 60 percent of online consumers reported difficulty with accessing their user accounts.

Due to this wave of hoarding and risky online shopping practices, major retailers and their customer service teams found themselves inundated with calls to rectify these incidents. This was further compounded by strained skeleton call-center crews working remotely and unable to deliver the same level of customer service due to limited resources. These factors all lead to a poor customer experience which diminishes customer loyalty and has a greater effect on the business in the long term.

By rethinking the physical journey and leveraging friction-free technologies such as digital authentication, retailers can achieve a more holistic approach while striking a better balance with security and the customer experience.

Security is the Post-Pandemic Survival Tool

As social distancing restrictions ease, retailers must prepare for increased traffic both online and in-store as consumers' newly adopted shopping habits are here to stay for the long term. Behavioral analytics and other passive digital authentication solutions can help retailers better protect customer transactions from start to finish (without the user even knowing, in most cases), creating peace of mind for the consumer knowing they’ve chosen a merchant they can trust. This is where the “phygital” experience comes into play, blending the elements of both a physical (curbside pickup, displaying your photo ID) and digital (selecting inventory and submitting payment, multifactor authentication) shopping experience together, showing how retailers can embrace the shift in how we shop while protecting our personal data in the process.

For brands to survive the post-COVID world, they need to invest in security and user experience now — ideally through a single vendor. Providing a user-friendly and highly secure customer experience should be top of mind for all retailers as they emerge from the pandemic-induced shutdown — from in-store interactions to the customer support call center and everything in between. By monitoring their services and introducing new solutions to better cater to the user experience, brand loyalty will not only remain intact, but prosper.

Amir Nooriala is chief commercial officer at Callsign, a real-time, AI-driven identity and authentication solutions provider.