Published on PYMNTS.com February 26, 2020

Restaurants are diving head first into digital innovations, such as mobile ordering and rewards programs.

These merchants have always been vulnerable to in-person fraud, including coupon or promotion scams, but digital channels create new avenues that bad actors can exploit.

Security standards have largely not kept up with such threats like credential stuffing, according to a joint study from Javelin Research and Kount. Their research found that nearly half of surveyed restaurants’ online and mobile ordering solutions require only usernames and passwords to log in — a known security weakness given that customers often use the same passwords for multiple accounts.

The study also noted that only 27 percent of restaurants’ digital investments were focused on fraud mitigation, with establishments instead allocating resources to mobile ordering.

This also means fraud runs relatively unchecked among quick-service restaurants (QSRs), with total fraud losses on an average order of $15 reaching as high as $36.25. Many chains have thus been turning to fraud detection programs driven by artificial intelligence (AI) to make the most of their limited prevention resources, leveraging various techniques to stop bad actors’ advances.

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