The Mobility of Fraud
Understanding the Challenges of Mobile, Loyalty and Virtual
Initiatives
Michael Loox, CFI
David Johnston
Director of Loss Prevention & Safety
Coffee Bean and Tea Leaf
mloox@coffeebean.com
Sr. Director, Loss Prevention
Dunkin’ Brands
david.johnston@dunkinbrands.com
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Objectives
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Today’s changing payment landscape
The challenges that may lie ahead
Identifying fraud in the mobile environment
Getting ahead of the curve
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The Coffee Bean & Tea Leaf® in the World Today
52 Years
27 Countries
1010 Stores
14,000 Passionate Team Members
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Dunkin’ Brands is home to two of the world’s most recognized and loved brands:
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11,300 Dunkin’ Donuts restaurants in 36 countries
7,500 Baskin-Robbins restaurants in nearly 50 countries
1,200 Franchise owners and 50 international partners
Franchisee-reported sales of approximately $9.8 billion (2014).
Coffee Fact: Did you know that a single coffee tree produces only an
average of 1-1.5 lbs. of roasted beans annually?
Ice Cream Fact: Baskin-Robbins is part of 2 Guinness World Records –
Most cones scooped in a minute (19 - Mitch Cohen, Franchisee) and
Largest Scoop of Ice Cream (8,865 lbs. in 2005)
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Changing Payment Landscape
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EMV: Friend or Foe?
• Europay, Mastercard and Visa standards to
protect consumers against fraud
• Inclusion of a Chip & Pin Technology to make
counterfeiting cards difficult
• Expectations is for retail industry to be
compliant by October 2015
• Merchant absorbs more liability
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EMV: Friend of Foe?
• 10 Million devices require change in U.S.
• Issuers pushing for chip-enabled card
distribution – hit 10/1 Liability Shift
• Card variations to exist until ?2017?
• Online fraud expected to increase
– UK had upwards of 150% increase
– Increase in Mobile Fraud
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How would you like to pay?
Mobile Wallets
Google Wallet / Apple Pay / Visa Checkout
200+ variations across the globe*
Contactless Payments
NFC / QR Codes / SMS Payments
Mobile Applications (Loyalty and Private Label)
Online Payments
Mobile / Advanced Ordering Applications
Gift Cards and Merchandise (CNP environment)
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The Mobility of Fraud
• Mobile Fraud
– Virtual Activations, Value reloads, Ordering
• “Account Take Overs”
– Mobile Accounts with Stored Value
– Loyalty Accounts
• Digital Fraud Schemes
– Coupons
– 3rd Party Gift Card Sales
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Mobile Fraud
Using stolen credit card numbers to put value on a gift
card or make a purchase in an above store
transaction. (Card not present environment)
Expansion into virtual card
activations, online reloading can
increase the potential for fraud.
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Mobile Applications Fraud
Schemes involving private mobile applications involving
Ordering, Payment, Loyalty Programs.
“Account Takeovers” – when an outsider gains access
into a customer’s account and either “leeches” or “takes
over” their account.
– Pretends to be the consumer and uses value on the app for
purchases
– Changes access to the account and controls value
– Removes value (de-registering) and re-registers the value on
another account
Consumers think…Data Breach
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Loyalty Fraud
Benefits of Loyalty Programs- Economics
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Loyalty Fraud: Then & Now
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Costs of Loyalty Programs
Customer abuse- multiple accounts, exploit rewards
Credit card / Gift Card fraud through app
Employee theft- more avenues and opportunities:
point shaving, gifting points, misuse of loyalty
redemption codes
Value Transfers: e-gift
and loyalty points
• Real Time Redemptions
• No App Needed!
Link to phone #
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Digital Schemes
• Digital marketing can cause greater concern
with fraud
• Opens 3rd party fraud channels and affects
brand and consumer loyalty
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Staying Ahead of the Curve
Be a continued learner and partner
• Learn your digital environment
• Understand industry trends and future
applications
• Partnerships with IT and
Marketing
• Get involved in Strategic
discussions
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Staying Ahead of the Curve
Understand Proactive Prevention
• IT Capabilities to thwart attempts
– Forced account log-ins
– “Bot” applications to automate attempts or
uncover account credentials
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Example of a Credential “Bot”
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Courtesy of Krebs on Security
Staying Ahead of the Curve
Understand Proactive Prevention
• Proper controls and restrictions
– Expiration of coupons or loyalty points
– Account thresholds
– Strong customer password/multiple
authentication process
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Staying Ahead of the Curve
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Stay current in the payment landscape
Work with cross-functional teams
Think Sales first, but understand exposure
Changes in investigative process
Be ready for constant change
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Thank you for your time
and enjoy the conference
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