Mobile Fraud Expected to Explode by 2017

 
 
By Karen A. Frenkel  |  Posted 02-24-2015 Email
 
 
 
 
 
 
 
 
 
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    E-Commerce: Mobile vs. Internet
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    E-Commerce: Mobile vs. Internet

    33% of organizations surveyed said they generate revenues from the Internet of about 26%-50%, and 25% indicate that 11%-25% of that revenue arrived through a mobile app.
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    Mobile E-Commerce Revenue Growth
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    Mobile E-Commerce Revenue Growth

    50% of organizations surveyed said mobile revenues will grow 11%-50% over the next three years. 30% believe it will grow 51%-100%.
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    Darkside to Mobile Revenues
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    Darkside to Mobile Revenues

    Companies reported the following mobile revenue losses due to fraud last year: No losses: 8%, 34% lost 5%, 14% lost 10%, 15% lost 25%
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    Protecting Against Fraud
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    Protecting Against Fraud

    66% of respondents said they can quickly detect and remediate Internet and mobile fraud on their sites. Despite their confidence, many fraud incidents cause significant revenue losses and the report concluded that they lack adequate security.
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    Growth in Mobile Fraud Expected
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    Growth in Mobile Fraud Expected

    19% of companies said 20%-49% of their fraud incidents are due to mobile devices. Rates are expected to double over the next 2 to 3 years unless companies quickly implement significant remedial actions.
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    Percentage of Mobile Fraud
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    Percentage of Mobile Fraud

    48% of respondents said they experienced between one and 24 fraud incidents last year. 25% said they experienced between 25 and 250 incidents. The small number of incidents reported either shows that organizations have a small scale presence on the Web, or probably are "oblivious" to what's happening.
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    Average Mobile Losses
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    Average Mobile Losses

    The average mobile loss was $92.3 million last year. On average, respondents said losses due to mobile fraud were 3% of total revenues annually.
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    Mobile Transactions' Growth Underestimated
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    Mobile Transactions' Growth Underestimated

    Respondents expect an average of 47% growth of transactions on mobile during the next five years, which the survey authors said is too conservative. Assuming today's loss ratios persist, mobile losses will increase by at least 47%.
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    Recommendations
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    Recommendations

    Companies should invest in an amount equal to 10%-20% of their annual losses due to fraud to boost their ability to limit or eliminate such losses.
 

Over the next few years, e-commerce conducted on mobile devices and apps is expected to surpass purchases through browsers on personal computers, rendering companies that have not secured their mobile transactions vulnerable to rampant fraud. This is according to a new study by J. Gold Associates, a market research firm that surveyed 250 organizations for its study, "Mobile E-Commerce: Friend or Foe?" Respondents were employed by organizations with annual revenues of at least $2.5 billion, and they responded to a Web-based questionnaire. "Expected growth in mobile app revenues reflects both the market reality of more mobile users, as well as the realization that to remain competitive, companies must offer mobile apps on smartphones and tablets despite the significant security risk and potential fraud," the study said. Statistics indicate "a staggering level of fraud induced losses," and indicates that current systems and processes are not adequately addressing the problem.

 
 
 
 
 
Karen A. Frenkel writes about technology and innovation and lives in New York City.

 
 
 
 
 
 

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