Fraudsters are targeting multichannel services and taking over shoppers’ retail accounts following the industry’s success in preventing payment fraud.
The seventh annual Fraud Attack Index from ecommerce fraud prevention business Forter shows fraud attempts being made both in targeting customer loyalty and in store, through click and collect and return-to-store services.
Online fraud grew in value by 12% year-on-year, with loyalty programme fraud up by 89%, and both click and collect and buy online return in-store fraud up by 23%. Some 1.5m people whose accounts had already been compromised had additional accounts opened fraudulently in their name, transferring money to these new accounts from their original legitimate accounts.
“A clear trend in online fraud is emerging,” said Michael Reitblat, CEO and co-founder of Forter. “The industry as a whole has done a tremendous job detecting and preventing payment fraud at the point of transaction. This eliminates the amateurs. We’re seeing fraudsters now shift their efforts earlier in the customer journey, gaining access to consumers’ accounts.”
He added: “A second trend shows that fraudsters are diversifying into softer currencies that are not primarily financial and moving beyond transactional credit card fraud into areas such as loyalty account fraud and policy abuse.”
Industry sectors that saw fraud increase included air travel (+61%), apparel and accessories (+44%), food and drinks (+41%), land travel (+38%), electronics (+5%) and jewellery (+5%). Fashion merchandising, said the report, is in high demand and products are easy to resell. "The apparel and accessories industry is also a perpetual target for fraud since buying items in bulk, whether for sports teams or other organisations, is quite common and unlikely to raise suspicions as it might in many other industries,” said the report.
Fraud fell in hotels (-10%), digital goods (-16%), marketplaces (-24%), beauty (-36%) and home and garden (-50%). Beauty, said the report, had seen fraud decrease as a function of the market expanding quickly.
Jordan McKee, research director at 451 Research, said: “Today, the customer journey has become more complex as consumers engage with brands and products across numerous touchpoints for a truly omnichannel experience,” noted. “The data in the latest Fraud Attack Index is proof that, as the global payments and ecommerce system shifts, online criminals shift as well. As fraud shifts to weaker points in the system, merchants must likewise expand their focus to protect themselves and their customers at all touchpoints.
“Merchants need to respond by implementing a continuous and automated approach that assesses events throughout the entirety of the customer journey,” said Reitblat. “It’s no longer sufficient to focus solely on chargebacks and credit card fraud at the point of transaction. Only a fully integrated fraud prevention platform will enable merchants to address fraud in a holistic and accurate manner across the entire customer journey.”