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Gartner Predicts Rapid Growth in Use of Social Network Identities for e-Retail

Gartner estimates that 5 percent of new retail customers’ identities are based on social network profiles and identities today, but they expect this grow to 50 percent of new retail customer identities by the end of 2015.

Social media and social networks have been used for both risk management and optimizing user experience for several years. Many merchants use fraud prevention services that provide demographic information gathered from social networks based on a user’s email address and the social media profiles associated with that email. More and more often we see websites allowing users to login using their Facebook or other social media account rather than being required to create a new account or profile with the website. These processes enable the user to login or join more quickly, and the business or website can utilize much of the social media profile information to build out user profiles of their own. Logging in to or joining a web service through the web’s largest social network can be done through a service called Facebook Connect, but many sites also allow users to sign up or join by logging into their email account or another social media profile.

While this is primarily used for websites where users are required to join to post comments, see content or other activities not related to commerce, it is possible more online retailers could adopt similar techniques for registering new buyers. Today many eCommerce retailers allow guest checkout because requiring user registration can lead to attrition and decreased sales conversion, but if offering a quicker way to set up a user account by logging into a social network profile, this process becomes much quicker and easier for the user.

Of course this process can also bring increased risks. Just as fraudsters create fake account profiles directly with an online merchant, they also create fake social media profiles and could use these across multiple online retailers for setting up fake buyer or user accounts. Online merchants may use Facebook Connect and similar services to make it easier for consumers to register, but performing identity authentication and verification would still be necessary. In general the authentication performed on an identity setting up a social network profile is weak relative to what a merchant would perform before accepting an online transaction. But this does make the registration or sign-up process more streamlined for the user, and enables the merchant to build their own user profile starting with some of the information obtained through the social network and then using this information for authentication, verification and to compare against billing and shipping information. The user information provided through the social network should be screened and verified just as if it came from the user in the typical account setup process.

While Gartner estimates that 5 percent of new retail customer identities are based on social network identities today, they see the potential for this to grow as it can benefit user experience and there can be additional social network analysis to find fake identities as well as providing other signals, such as the age of the social network account. It is well documented that consumers are tired of remembering new usernames and passwords for every website, and this often leads to the consumers reusing login information across many websites. Although, if users can continually login to a merchant’s website using their social network credentials this presents new risks associated with account takeover, especially when stored billing instruments are involved. Gartner predicts that 50 percent of new retail customer identities will be based off of social network identities by the end of 2015, but there are many factors and risks for retailers to consider before implementing such features.

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