It’s no secret that fraudsters increase their activity and fraud attempts during the holiday season when many merchants are at peak volume, but considering other fraud factors ACI Worldwide predicts a more than 40 percent increase in fraud this holiday season. Meanwhile the FBI warns of fraudulent merchants, mobile apps with malware and work from home scams that become more prevalent during the holiday season.
According to estimates from ACI Worldwide, online retailers will see a 12 percent increase in fraud attempts globally this holiday season compared to last year, although the average purchase amount per fraud attempt is expected to be lower. Card Not Present channel fraud attempts in the United States, however, are expected to increase at a much higher rate, 43 percent by volume compared to last holiday season. This significant increase is primarily due to the expected shift in fraud to the CNP channel following the rollout of EMV cards.
Increased use and mandates of Consumer Authentication programs occurred in several European countries following the implementation of EMV. As EMVCo prepares to release the 3DS 2.0 protocol and more secure chip cards push more fraud online, 2017 will be a pivotal year for these authentication programs. Please take the 4th Annual Consumer Authentication Survey to provide your input that can help shape the future of the industry.
According to ACI Worldwide’s predictions, the online fraud attempt rate will be 1.6 percent in North America this holiday season, which is less than half of the fraud attempt rate expected in Europe and Asia (3.6 percent). While fraud attempts will spike on Black Friday and Cyber Monday, ACI says that the most active fraud day of all will be Christmas Eve, with an estimated 2.5 percent fraud attempt rate, where fraudsters target gift cards and other last minute gifts, often with in-store pick-up.
Fraudsters increase their activity during the holiday season because they know they can hide in the high volume. During this time of year it is more common for customers to ship to gift recipient addresses, and consumers are typically spending more money overall and more per transaction. Not only can fraudsters better hide in more orders, but many organizations require seasonal help to keep up with transaction screening and manual reviews. These temporary review agents tend to have less experience and not perform as well as year-round employees, making it more likely a fraudster can slip a bad order through. Organizations hiring season employees to help with increased manual order reviews during the holiday season should consider professional training, such as the eCommerce Fraud Agent Certification, to bring new hires up to speed on the fundamentals, and then be sure they are familiar with the systems and services the organization utilizes.
Merchants and online organizations need to take extra measures to protect themselves from fraud during the holiday season, and consumers should too. The FBI warned of several holiday scams in a recent bulletin and warning to the people. This included fraudulent merchants that offer too-good-to-be-true online deals, where the consumer is often giving their payment credentials or other identity information directly to a fraudster. They warn of phishing emails and spam that link to such deals or sites, as well as social media scams involving deals or coupons for taking surveys that are really just designed to steal personally identifiable information.
The FBI also warns of increasing work from home scams this time of year. These may just be after the applicants SSN and other identity information for ID theft, or these can be scams to solicit money mules for assisting fraudsters. An unsuspecting consumer can start a “job” as a gift wrapper, but they are essentially being used to receive and re-ship fraudulently purchased goods. Lastly the FBI warns of malware hidden in mobile apps or games, often free and holiday themed ones. They especially warn of third party app marketplaces, that may have pirated versions of a legitimate game or app with malware added.
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