Retailers around the world are increasing their fraud teams and budgets because of a significant rise in all types of online fraud during the pandemic.
72% of retail brands around the world expect to grow their fraud team in the next year, while 76% predict their budget to tackle fraud will increase in the next 12 months — with one in five (20%) expecting a “significant” increase, finds research by fraud detection and payment acceptance specialist Ravelin.
This focus on fraud detection has been driven by surges in online payment fraud, account takeover, refund abuse and promotion abuse as the pandemic has shifted a substantial proportion of sales to ecommerce in the face of physical store closures across the world.
Almost 40% of fashion and FMCG retailers see online payment fraud as their biggest fraud risk, while refund abuse, where consumers wrongly claim they never received a product they ordered online, has increased for half of retailers. Account takeover, often the result of password reuse across multiple retailers, has also risen for 45% of retailers in the past 12 months.
Ravelin’s findings today are part of a new retail report, which draws on the opinions and experiences of 1,000 fraud and payments professionals working in large online retail businesses all over the world. The report provides a valuable in-depth understanding into merchant fraud teams, their environment, top business threats, fraud activity trends and forecasts.
The issue of fraud in an ecommerce world is likely to get worse before it gets better, the report argues, especially as many traditional high street brands, like Topshop and Debenhams have been acquired recently and are moving their business completely online.
Mairtin O’Riada, co-founder and CIO at Ravelin said: “The conditions of the pandemic have created a veritable petri dish for the growth of fraud. Retailers are scrambling to drive ecommerce and are handling extremely high volumes of transactions online, while also trying to fulfil a growing number of online deliveries. At the same time, honest consumers and avid fraudsters are feeling the pinch of a shrunken economy — many have lost their jobs and money is tight.
“Trying to detect fraud manually under these conditions is a difficult and expensive undertaking. Technology that can be built specifically to your needs can help detect fraud in the moment, and help retailers to mitigate the effects of fraud significantly — helping to protect profit margins at a time they’re needed most.”