In “Alice in Wonderland,” Alice’s entire world is transformed when she decides to follow the rabbit down the rabbit hole. Merchants are now facing a similar choice with the introduction of the Metaverse – do they follow into the unknown or risk getting left behind?
While Meta hasn’t promised Cheshire cats or mad hatters (yet), luxury brands have begun to use the Metaverse and other similar digital worlds to reach global audiences. Gucci created a virtual handbag that sold for $4,100 (which is more than it is sold for in stores) and Balenciaga unveiled its 2021 collection initially on the popular game Fortnite. Plein, a luxury brand that now accepts more than 20 different cryptocurrencies, recently dropped $1.4 million to buy virtual real estate in Dencetraland, an online platform that provides a metaverse experience. Other brands will likely follow suit as the popularity of NFTs and the demand for more virtual assets rise.
Morin Oluwole, the director and global head of luxury at Meta, recently urged brands to prepare for a “hyperdimensional shopping experience” at Paris Fashion Week. What exactly that entails and whether it will be successful remains to be seen. But brands are rightfully starting to ask hard questions such as, “Do we take the jump and invest or wait and risk being left behind?”
But, it is important for retailers to weigh the pros and cons before falling down the rabbit hole of the Metaverse — especially when it comes to the delicate balance of stopping fraud and optimizing customer experiences.
Digital commerce is projected to account for 22% of all retail sales by 2023 — a 7.9% jump from 2019. Unsurprisingly, its rise in popularity has caught the attention of consumers and scammers alike. From card testing, account takeover ,fraudulent account creation and compromised loyalty programs/points, the possibilities for bad actors are endless.
In an effort to curb fraud attempts and a hit on their bottom line, some retailers have doubled down on stricter policies. For example, blocking transactions based on IP addresses or transaction amount. However, many of these policies are too rigid, resulting in legitimate customers being turned away and merchants losing out.
With many merchants still struggling with stopping fraud in traditional digital commerce, it begs the question: how will these problems play out in the Metaverse?
The truth is, no one knows exactly what fraud will look like in the Metaverse. What’s for certain is that bad actors will follow the money trail. For example, the possibility of creating multiple identities in the Metaverse could provide an opportunity for fraudsters to create fake profiles and place bids on items. Or automated bots could be used to impersonate legitimate users, creating unnecessary digital traffic that can slow down these virtual spaces, similar to reseller activity in the real world.
Both payment and personal information could also be at risk of potential compromise if not properly secured. This type of data is extremely lucrative for bad actors and readily available in the Metaverse.
The lines of the Metaverse are blurred, and it’s hard to secure things without firm edges.
With the Metaverse, we found Wonderland. But before retailers get lost in it, it’s important they prioritize the security and customer experience of traditional digital commerce. Then, when the time comes, they can more confidently jump down the rabbit hole.
Here’s how:
Requiring that users enable MFA for account logins helps prevent fraudsters from gaining access to the accounts. Many businesses use 3D Secure (3DS) to implement MFA on their websites. 3DS is a technology to securely validate users, who authenticate their identity using two of the following:
With real-time, modern fraud prevention solutions that are backed by machine learning technologies, retailers can identify unusual behavior for user accounts quickly. These solutions also use data to make precise decisions about the trustworthiness of users so that fraudsters are stopped in their tracks.
As merchants weigh the risks and rewards of expanding into the Metaverse, it’s important to understand the fraud and customer experience implications. Before making the leap, retailers should ensure their existing digital commerce platforms are secure.
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