Generational divides are somewhat vague. However, Gen-Z is generally seen as including anyone born between 1997 and 2012. The members of this group are known as the first true “digital natives.”
In 2022, Gen-Zers (or “zoomers”) will range from ages 10 to 25. One might assume their tech-savvy, lifelong relationship with technology would protect them from online fraud. However, their familiarity with technology is actually creating a false sense of security. As a result, zoomers face more unexpected challenges than any other group.
Fraudsters are on the prowl, tailoring their tactics to the behaviour of their targets. A 2021 study found that Gen-Z consumers are more likely to fall victim to phishing scams. They are also more likely to become victims of unauthorized bank and credit card charges.
Merchants Need to Protect Gen Z’s Consumer Power
Online payment fraud remains a top concern for merchants. Falling victim to fraud results in a loss of credibility, reputation, and customer numbers. For the customer, fraud means losing confidence in a merchant that may decline their order.
To mitigate generational fraud threats, merchants must ensure customers are protected from cyber scams. They should also be prepared to give the consumer-power of Gen Z top priority. This is the only way to maintain customer loyalty Among this massive, increasingly influential consumer block.
The onus is on merchants to provide a series of safeguards to preserve the customer shopping experience and create a stronger sense of loyalty during Gen Z’s prime consumer years. The question: where should they begin?
Fine-Tuning Screening Rules for Each Sales Channel
The first step merchants should take is to monitor each sales channel to detect a range of specific metrics.
Data showing good orders approved, good orders rejected in error, blocked fraud, and successful fraud should be analyzed to pinpoint fraudsters’ activities. This will help determine which channel the highest number of fraudulent attempts and which has the highest count of false rejections. For example, mobile commerce, or traffic driven specifically through social media.
This information can then be used to adjust and fine-tune order-screening regulations. Screening can be better fitted to each individual sales channel. Rules can be used to allow and prevent orders, but they can also be more robust. They can ultimately enhance the protection of consumers and reduce fraud-related costs for merchants.
Identify Good and Bad Consumer Behaviour
Basic fraud-screening tools can often lead to automatic rejection of orders. Although a merchant may feel that this process is enough to weed out good consumer behaviour from the bad, false positives will occur.
An honest customer can be labelled as risky. This results in a lost relationship between consumer and merchant.
Artificial Intelligence offers a more enhanced analytic screening process that can be used to prevent a huge number of true fraudulent attempts. Order data gets analysed against datasets including geolocation and device ID, a customer’s purchasing history, the velocity of their online purchases, and other important markers.
It’s important to note that even AI can occasionally miss factors and flag a genuine order as suspicious. It is therefore important for merchants to implement fraud analysts to manually review orders that have passed through the AI. This creates a fine level of clarity to ensure bad orders get flagged, while good orders go ahead. This will protect consumer trust as well as the merchant’s costs.
Using Machine Learning Systems as a Way of Keeping up With Fraudsters
Fraudsters are stealthy. Obtaining stolen credentials on the dark web is easier than ever. Impersonating generational buyer behaviour by passing Know Your Customer (KYC) checks is becoming second nature.
Merchants should implement sophisticated machine learning systems (ML) to keep up with fraudsters. These automated systems use trained models which can clarify all order decisions.
Orders pass through an AI system and manual spot-checks, which let the system learn, adapt, deploy new algorithms, and refine fraud controls. This process gets smoother—and faster—the more data the machine accesses.
Over time, a clear resolve to distinguish the good customers from the bad will become more precise. The result: the ultimate fraud-detection process.
Understand the Unique Challenges of Gen Z
For merchants, it pays to invest in fraud detection. Now, more than ever.
Generation Z makes up 30% of the world population. As they interact with the internet, they are more inherently trusting when it comes to sharing personal data. Their consumer power hangs in the balance.
A fight-back against fraudulent activity, by leveraging the right tools, will protect merchants from falling prey to those deliberately targeting Gen Z. In return, will protect Gen Z from becoming victims of fraud. The overall benefit of a crackdown on fraudulent activity will result in a positive customer experience at a lower cost to the merchant
