Author: Julie Campbell

Merchants are losing an average of $334 for every $100 of fraudulently made purchases on their sites.

According to the results of the recent True Cost of Fraudsm Mobile study, which is held annually by the Reed Elsevier from LexisNexis Risk Solutions, mobile commerce is facing a very expensive problem through fraud.

Merchants have been increasing to m-commerce on a steady basis and fraudsters are seeing this as an opportunity.

According to the study results, revenue from mobile commerce that is lost as a result of fraud has increased by 70 percent, last year. It rose to 1.36 percent in 2014 after having been 0.80 percent in 2013. Comparatively, among all merchants, 2014 saw an increase that brought the total lost revenue from fraud to 0.68 percent, after having been 0.51 percent in 2013.

There are a number of different avenues for fraud in m-commerce, due to the complexity of the broader range of payment channels, such as online payments programs and digital wallet apps. This in combination with added access channels such as native apps, shopping comparison apps, and mobile websites can considerably increase the risk of fraud.

The research has revealed that the average number of payment channels offered by mobile commerce merchants is 4.5.

This is notably greater than the average number of payment types accepted by online or in-store merchants, which is 2.6. This higher number of acceptable types of payments has placed those companies at a notably higher level of fraud exposure.

Twenty one percent of all fraudulent charges that were recorded were linked to mobile commerce. This is upsetting as the number of transactions that are actually occurring over smartphones continues to be a small percentage of the total sales for merchants. Last year, 14 percent of all of online transactions occurred over mobile channels.

According to the LexisNexis Risk Solutions vice president of corporate markets, Dennis Becker, “Mobile commerce is going to be more widely adopted by merchants because customers are clamoring for the convenience. To reduce customer friction and sell more through the mobile channel, now is the time for mCommerce retailers to put in place fraud prevention tools to counter the disproportionate amount of fraud that is currently occurring.”

The company’s assets have now been acquired for $4.5 million by SITO mobile.

Recent reports have shown that the Bellevue, Washington based mobile marketing company, Hipcricket, has now filed for bankruptcy as an independent company and that SITO Mobile has now acquired its assets for $4.5 million.

Hipcricket filed for bankruptcy protection, last week, despite its 21 U.S. patents and $26.7 million in annual revenues.

SITO Mobile was quick to recognize the opportunity and acquired all of the mobile marketing firm’s assets. According to its CEO, Jerry Hug, “Consistent with our goal to accelerate our growth, if completed, the acquisition of Hipcricket will bolster our services and solutions and increase our revenue from a customer base which would then include 38 of the Fortune 100 companies.”

The Hipcricket mobile marketing company’s press release announced that acquisition was its best direction.

In the release the CEO of Hipcricket, Todd Wilson, explained that selling its assets in a court-approved agreement was “the most viable option to protect our human capital and maximize recovery for our stakeholders.” Filing for bankruptcy was a decision that the company made in order to “facilitate the sale”.

The press release explained that throughout the process of filing for Chapter 11, as well as during the acquisition process, Hipcricket believes that its typical daily operations will remain the same, subject to the “first day” motions approval by the Court. Hipcricket is also working to obtain approval from the Court in order to be able to keep up its current payroll and benefits program, in addition to maintaining the cash management system that is already in place. It wants to be able to keep up its typical daily business activities.

To make it possible for the company to keep up those operations throughout the acquisition period, the press release explained that SITO Mobile has agreed to provide debtor-in-possession (DIP) financing of up to $3.4 million to Hipcricket. All of this, of course, is subject to court approval, but at the time of the writing of this article, those were the intentions of the two companies that are involved in this acquisition.