Is fraud an unavoidable inconvenience in eCommerce? Many businesses believe that it is, but they may not realize that the consequences of fraud cost them much more than just the value of the products lost due to fraud.

 

Fraud in eCommerce isn’t just an immediate financial loss; it’s like an earthquake. It shakes businesses in stages, damaging reputation, eroding customer trust, disrupting future sales, and the effects continue to ripple outward. Did you know that the Indian eCommerce brand lost $630,000 in a meticulously planned fraud scheme where fraudsters exploited vulnerabilities in payment and logistics processes to carry out the fraud? (Source: TOI)

 

To alleviate the impact of fraud on eCommerce platforms, technologies like Device fingerprinting have become increasingly popular among businesses worldwide. However, despite its growing use, Device fingerprinting has faced controversy, with concerns about its potential to compromise user privacy and security. 

 

Let’s explore the pros and cons of device fingerprinting for eCommerce and better understand how to effectively implement it, striking a balance between enhanced security and maintaining user trust.

 

Understanding Device Fingerprinting for eCommerce

Fraud typically starts with a device, whether used to create fake accounts on online marketplaces or to exploit vulnerabilities like scalping, inventory hoarding, or promo abuse. Rather than relying on a single fraudulent account—which can be quickly identified and blocked—fraudsters often deploy tools like app cloners and emulators to create numerous counterfeit accounts, making it harder to trace and stop their activities. 

 

Device fingerprinting technology can effectively identify such risky devices by combining device attributes with behavioral, network, and location data, helping prevent fraud at its root. It’s very effective in identifying fake accounts: a major challenge in eCommerce where fraudsters take advantage of a promo code meant for new visitors, by creating multiple fake accounts each with a different email address and personal information.

 

Unlike traditional identification methods like cookies, which users can easily delete or block, Device fingerprinting for eCommerce offers a more robust and persistent solution. This makes it much harder for fraudsters to bypass or manipulate, providing a more reliable way to identify suspicious activity.

 

Pros of Device Fingerprinting in eCommerce:

 

Enhanced Fraud Protection and Precise Device Identification – 

Due to its reliance on device attributes, device fingerprinting is highly accurate in identifying devices and cannot be easily tampered with. It is also highly resilient against factory resets and advanced tampering, effectively preventing fraudsters from masking their identity. As a result, device fingerprinting is currently the most reliable technology for identifying devices involved in fraud.

 

One key advantage of device fingerprinting in eCommerce is its ability to accurately identify devices, even in cases of tampering. Since it relies on unique device attributes, it is extremely difficult for fraudsters to manipulate or mask their identity. This technology is ultra-resilient against factory resets and advanced tampering attempts designed to hide fraudulent behavior. As a result, device fingerprinting provides a high level of security for eCommerce businesses, making it an essential tool for combating fraud and maintaining trust with customers.

 

User Personalization and Enhanced Customer Experience – 

Device fingerprinting is an excellent tool for enhancing the customer experience on eCommerce platforms. When applied in eCommerce, it can improve product recommendations based on device attributes and past interactions.

 

This provides a key advantage in presenting the right products to the right audience, ultimately boosting sales and increasing customer engagement and loyalty through personalized recommendations.

 

Advanced Analytics and Improved Insights – 

Device fingerprinting technology enables eCommerce businesses to analyze data at the device or user level, providing valuable insights into user behavior that can support targeted marketing efforts.

 

With this data, marketers can gain a deeper understanding of user preferences, behaviors, and purchasing patterns. By identifying recurring behaviors and user interactions, businesses can pinpoint weaknesses, identify areas for improvement, and tailor their marketing strategies more precisely.

Cons of Device Fingerprinting in eCommerce:

 

Challenging to Implement – 

Most device fingerprinting solutions require a tedious setup process and a long initial training period. These solutions can take significant time to implement, as they need to analyze and learn from existing scenarios before they can be effectively deployed. Device fingerprinting is typically combined with machine learning to identify both past fraud and patterns that may lead to future fraud. However, this process often takes months to deliver fully accurate results, during which time the eCommerce platform remains vulnerable to fraud, wasting valuable resources and leaving it exposed.

 

eCommerce businesses should prioritize plug-and-play fraud prevention solutions. These solutions are customizable, can be integrated quickly, and provide results from day one.

 

Privacy Concerns – 

Unlike cookies, where users have some control over their implementation, device fingerprinting operates discreetly without the user’s knowledge. This can raise privacy concerns, as users may feel uncomfortable with device fingerprinting accessing hardware and software attributes of their devices.

 

However, responsible implementation of device fingerprinting—coupled with transparency and user consent—can help mitigate these privacy concerns.

 

Potential for Misuse – 

eCommerce organizations looking to adopt fingerprinting solutions often have concerns regarding their users’ data, including how it is used, where it is stored, how encryption works, and who has access to it. Device fingerprinting is designed to comply with relevant regulations and, when implemented correctly, it respects privacy. While the approach itself does not inherently violate any regulations, the level of compliance can vary depending on the vendor and implementation.

 

Clarity and transparency are essential to ensure that both businesses’ and users’ data remain protected.

How Effective is Device Fingerprinting for Dealing Fraud in the eCommerce Industry? (Side by Side Comparison)

Conclusion

 

Similar to other fraud detection and prevention techniques, device fingerprinting for eCommerce has both pros and cons. However, as explained above, it is clear that the pros far outweigh the cons. When used responsibly in eCommerce, device fingerprinting is undoubtedly very useful, as it simplifies processes and helps keep fraudsters at bay.