Unattended retail is becoming a fixture of the modern-day retail experience, from grocery stores to gas stations to vending machines, and it’s attracting plenty of attention from both consumers and fraudsters.
Almost all consumers have interacted with unstaffed or unattended retail systems, according to a study from Consumer Reports, which found that three-quarters of surveyed responders had tried self-checkout or self-service terminals in the past year.
The study also found that consumers overwhelmingly enjoyed using these unattended systems — 75 percent of respondents who had tried a self-service terminal said they enjoyed using it because they felt it saved time. And the appetite for more unattended retail seems to be healthy, considering Consumer Reports found that the top complaint among consumers was that retail stores and other merchants did not have enough unattended lanes in their stores.
But with that increased consumer attention and use comes interest from fraudsters, looking to seize upon some of those unattended dollars. And according to Sydney Green, senior director of risk and authentication products at Visa, unattended retail terminals can be particularly appealing to bad actors, because there are no employees and often not even another customer to spot them in the act of committing fraud at the register.
In a recent interview, Green told PYMNTS the company is working to combat unattended retail fraud with Visa Transaction Advisor (VTA) — a product designed to keep bad actors away from self-service terminals — and is finding success with it.
Fraudsters eager to burn unattended retailers
While customers may enjoy the convenience seemingly offered by self-service and unattended terminals, these terminals have become particularly susceptible to crime.
One recent study of U.S. retailers found that the use of self-service terminals led to an increase in losses due to fraud and crime. Major breaches have even occurred at unattended and self-service terminals to renew drivers’ licenses and health insurance cards run by the Canadian government, exposing payment details for thousands of customers and eventually forcing the terminals to be taken offline.
Green said that breaches like these should not be all that surprising, because unattended retail systems have many of the traits that fraudsters and other criminals look for when choosing their targets. She also noted that gas stations and other environments where consumers often use cards without interacting with an employee can be especially vulnerable to fraud.
“We really see a tendency toward criminal behavior at these unattended environments,” Green said. “There’s no station agent or other employee standing there watching … to see who it is who’s actually swiping the card at the pump or whether they’re committing any type of fraud or counterfeit activity. That kind of environment can be a good opportunity for these crooks to come in.”
In order to help combat this criminal activity, Green and her team rolled out Visa Transaction Advisor, a system initially designed for gas stations. She noted that merchants are able to activate and use the product with almost no onboarding time and without any modification to existing pumps. That is important for merchants, since changing hardware on gas pumps often requires a lengthy and expensive refurbishment processes.
The VTA system begins to work to detect fraud by assigning a risk score to each potential transaction, based on different factors surrounding the sale. That score is then used by Visa to decide whether or not to validate and process the transaction, all in real time.
Thus far, the system has cut fraud at gas stations. According to Green, merchants who have activated VTA, on average, have seen a reduction in fraud at the pump by 51 percent and a decrease in the use of counterfeit cards or other payment methods by 54 percent, and the system is currently used to review half of all fuel transactions processed by Visa.
Fueling the anti-fraud fire
Upon initial success using the unattended retail security system at fuel stations, Green said she and her team set out to find ways to bring that same protection to retailers and other merchants with self-service options. Green said that, as more retailers and merchants of all types incorporate unattended and self-service solutions, protecting these unattended terminals will become even more important.
“Unattended retail is the consumer experience of the future, and it has advantages to offer retailers from fast food to electronics to video rentals or any other verticals,” Green said. “We think there’s also a need for this in other retail areas where maybe there were traditionally clerks, because we’re seeing more unattended solutions there for fraudsters to target. We started with the fuel segment, but we’ve started to expand the solution.”
Green also noted that technologies currently used for authentication in other verticals, such as financial services, like biometric authentication, could one day become important tools for fighting unattended fraud and staying ahead of fraudsters.
The great unattended race is on.
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