PYMNTS Intelligence: Keeping Consumers Safe in Web 3.0

As ubiquitous as the internet may be, there are new and exciting virtual realities to consider: The metaverse is on its way. A poll indicated that four out of five consumers are looking forward to experiencing art, culture, fashion, movies, concerts and games in the virtual universe. From a business perspective, these technologies show promise too.

Seventy-two percent of businesses with an international presence intend to expand into new markets, fueled by investments in digital technologies. Fifty-six percent of executives said their business has a Web 3.0 strategy, and 47% said they expect Web 3.0 technologies to replace the current internet infrastructure within the next one to five years. Along with these benefits come pitfalls, especially security and fraud concerns regarding the metaverse and one of Web 3.0’s cornerstones: cryptocurrency.

This month, PYMNTS examines fraud and security trends affecting the rapidly unfolding third iteration of the World Wide Web.

Security Concerns in a Brave New World

With many organizations moving full speed ahead, they have had to consider factors that could slow their move to Web 3.0. The leading risks include security breaches and data leaks, cited by 73% of companies; cyberattacks, cited by 68%; changing regulatory requirements around data privacy, cited by 67%; and downtime caused by infrastructure issues, cited by 65%.

One look at the figures for cryptocurrency-related fraud confirms the major stakes involved. Since early 2021, more than 46,000 people have reported losing over $1 billion in cryptocurrency to fraud, with a median individual reported loss of $2,600. By far the most common currency used to pay these scammers was bitcoin, cited 70% of the time, followed by tether, used 10% of the time, and then ether at 9%.

Nearly half the people who reported losing crypto to a scam since 2021 said their first contact with the scammer was through an ad, post or message on social media. The majority of crypto-fraud originating on social media is investment fraud, with romance scams a distant second. Still, the median individual reported loss to those involved in romance scams is much higher: $10,000. Experts fear that without the adoption of rigorous security measures, identity fraud and theft, already some of the top metaverse risks, could grow even worse.

Tightening up Security

Fewer than 10% of consumers currently use secure biometric authentication methods, according to PYMNTS’ research. Selfie biometrics are some of the authentication tools crypto exchanges are deploying to verify their users, making this type of technology critical to the Web 3.0 and metaverse landscape. Consumer preferences around digital account logins are closely tied to their generational demographics, with older users generally preferring username and password authentication.

One reason for the low utilization of biometric authentication with older consumers may be that they simply are not well acquainted with this technology yet. Millennial and Generation Z tend to be more familiar with these methods, having long used one-click or biometric methods to unlock their phones or log in to social media accounts. Consumers unfamiliar with the technology may believe that using biometrics is hard or requires extra steps, causing hesitancy as well.

Nevertheless, PYMNTS’ research shows that 58% of consumers said they think biometric authentication methods are faster and more convenient than other authentication options, and 55% of consumers said they find them more trustworthy. Around half of consumers said they feel more comfortable using biometric authentication than other authentication methods. These results highlight that biometric logins are familiar to and accepted by consumers, who are amenable to switching to authentication technologies such as fingerprint scans and facial identification, even though relatively few would name these as their most preferred methods.

While biometrics certainly are not a cure-all, they are one method that may help keep data and funds secure in a Web 3.0 environment.