Online Retail Fraud Attempts Jumped 30% in Past Year
As consumers and retailers prepare for the holidays, both groups need to be vigilant against fraud. A new study found that online retail fraud attempts have increased by 30% in the past year.
In transactions where cards are not present (CNP), 1 out of 86 transactions in 2015 was a fraudulent attempt compared to 1 out of 114 transactions in 2014.
The study by ACI Worldwide, an electronic payments company, also found that cybercriminals are spending less during fraudulent transactions but attempting more of them. The average ticket value (ATV) has decreased from $282 to $273 since last year. Cheaper shipping costs, a decreasing cost of goods and an increasing amount of coupons contribute to this lower ATV.
The shift to more secure EMV cards has also led to changes. Since card present transactions in brick-and-mortar stores will be safer, criminals will shift their efforts to eCommerce channels.
“When it comes to fraud, 2015 is likely among the riskiest season retailers have ever seen; and it is critical that they prepare for a significant uptick in fraud, particularly within eCommerce channels,” said Mike Braatz, senior vice president, Payments Risk Management, ACI Worldwide. “Our findings suggest that merchants must be even more vigilant and shore up eCommerce fraud protocols, which may leave online shoppers more vulnerable.”
The most popular fraud attempts include:
- Digital downloads (virtual gift cards) – 9.55%
- Day or overnight orders – 6.57%
- International transactions – 2.38%
- Buy online/pickup in-store transactions – 2.15%
This holiday season, buy online/pickup in-store fraud attempts are expected to increase by 28%, as retailers do not require consumers to re-run their cards when they come to pickup up their products. This will be a way fraudsters can circumnavigate EMV fraud transactions.
ACI analyzed millions of card-not-present transactions between January and July 2015 to arrive at their conclusions.