Retail fraud attempts are projected to increase 14% during Cyber Weekend compared to last year, according to benchmark data from online payment provider ACI Worldwide based on hundreds of millions of merchant transactions. The fraud activity is likely to peak on Thanksgiving Day, according to ACI.
The value of retail fraud attempts is expected to increase by 17% over Cyber Weekend, while the average value of an attempted fraud transaction is projected to increase 3%, from $236 to $243, ACI said.
Over Cyber Weekend, ACI is projecting the following for overall transactions and fraud attempts, based on its data:
- Thanksgiving Day: the volume of transactions is expected to increase 23%, while retail fraud attempts are projected to represent 1.8% of all transactions
- Black Friday: the volume of transactions is expected to increase 19%, with fraud attempts accounting for 1.3% of them
- Cyber Monday: the volume of transactions is expected to increase 14%, with fraud attempts representing 0.93% of them
“The first step to fighting retail fraud is knowing what you’re up against,” said Erika Dietrich, global director of payments risk for ACI. “Fraudsters prepare for peak holiday season just as much as merchants and consumers do. By anticipating the increase in fraud during the holiday shopping season and being aware of where fraudsters may be lurking, consumers and merchants can get ahead of fraudulent activity and protect themselves.”
One new wrinkle in retail fraud, Dietrich said, is using a store app to enter an order with stolen personal information, then picking up the order in store. This can be defeated, however, when clerks ask for the card used to make the purchase and insert it into a POS terminal.
Another is call spoofing, when the frauster’s call to a contact center appears to be from a consumer placing an order, and the information is validated. With a system in place to raise flags about possible fraud, agents can ask to call the customer back, which can’t be spoofed.
Dietrich said ACI advises retail and ecommerce customers to practice “positive profiling” of customers to avoid driving away business from legitimate buyers due to steep or difficult authentication processes.
“Imagine losing a new customer before they have even bought anything,” she said. “If a new customer’s transaction is declined because it looks high risk, or if they abandon their purchase because of extra security measures that create friction in the buying process, that customer is unlikely to come back.”
First impressions count, Dietrich said, and retailers can’t afford to reject legitimate orders during the busy holiday season starting on Cyber Weekend, just because a customer has no history with you.
“By building comprehensive customer profiles based on detailed behavioral data from multiple merchants and externally confirmed fraud intelligence, merchants can screen the customer rather than just the transaction,” she said. “Ultimately, by producing more accurate results, positive profiling can empower merchants to tailor the customer experience, improve conversion rates, maximize revenue and block fraud.”
Some tips from ACI to avoid fraud on the consumer end include:
- Shop at reputable sites: Check the bottom right hand corner at checkout for a for a security icon
- Avoid public wifi: Personal and financial information are vulnerable on public networks
- Be wary of public charging stations: “juice jacking” with fake kiosks rigged to steal personal data from devices are becoming common
- Use biometric authentication: Take advantage of thumbprint or facial recognition features on mobile devices when possible
- Switch things up: Avoid using the same email and password combination with multiple merchants
- Set up PINs for online accounts: avoid “friendly fraud” and subsequent chargebacks, especially for families with young children
- Credit monitoring: set up automated alerts for online transactions
- Check credit reports: Various websites offer free credit scores, reports and insights