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Thwarting the Potential for Apple Pay Fraud

When electronics giant Apple announced its new mobile payment system, Apple Pay, more than 1 million consumers registered their iPhones for the new system in the first three days. But sometimes it’s those early adopters that get stung first.

It’s true that many retailers are adopting Apple Pay and other digital wallet technologies into their operations. As with any new and widely implemented technology, there is the potential for new and dangerous forms of fraud. Let’s look at some of the ways criminals might take advantage of this new technology, and how you might prevent these crimes from negatively affecting your retail operations.

Apple Pay

Zoom In on Point-of-Sale Transactions

Unless your payment card industry (PCI) system integrity has been hacked, fraud is most often going to happen at the point of sale. That’s why it is critical to integrate video surveillance and analytics into your security operations. One of the major flaws of digital wallet technology is the lack of identifying characteristics built into systems like Apple Pay. If someone steals your iPhone, there aren’t very many barriers to someone walking into a brick-and-mortar retailer, slapping down your phone, and walking out with a big screen TV. By using video surveillance, you not only have a video record of the fraudulent transaction to protect you and your employees, but if such an event occurs multiple times, you have comprehensive video intelligence that law enforcement authorities can use to identify and apprehend suspects.

Easy Isn’t the Same Thing as Safe

Admittedly, the amount of fraud being committed using Apple Pay is still relatively small with experts estimating the rate of fraud at about six percent. The nature of the technology was supposed to make stealing credit card information harder because of the way Apple generates the identifying transaction—in theory, a retailer never sees a customer’s information. But because Apple wanted the seamless user experience for which it is well known, the Silicon Valley giant required only the most basic credit card information about a customer. Because Apple believed so firmly that its own fraud algorithms were protection enough, the Apple Pay system exposed flaws in antiquated banking systems that criminals have been using to their advantage. While even a large retail operation can’t be responsible for the security of the world’s banking institutions, it is paramount that retailers do everything they can to secure the private information of their own customers.

Verify, Then Trust

Your retail operation would require a customer to produce identification to write a significant check for an item for sale. So why wouldn’t you require that a customer produce identification for any other item? Even Apple isn’t immune to credit card fraud. The Wall Street Journal reports that many recent fraudulent transactions at Apple stores buying expensive Apple products have been committed using credit data stolen from the breach of big box retailers. Banks are even turning to more complex methods like texting the phones of customers whose accounts show potentially fraudulent activity, but asking for a driver’s license may just be the first step towards nipping fraudulent Apple Pay and digital wallet activity in the bud.


About the Author — Christie Acker

Christie is responsible for helping Envysion’s enterprise clients in the retail and restaurant spaces understand the best ways to use video-based business intelligence to deliver on their brand promise and drive profitability. With over 15 years experience in building and supporting world-class sales organizations, Christie is an accomplished and tenured leader in the enterprise software sales market. An avid traveler, she has visited over 60 countries and uses her diverse experiences to help understand clients' needs to design and implement solutions to help achieve their goals. Christie holds a Bachelors degree in Economics from Vanderbilt University.


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