The busiest shopping time of year offers more than tidings and good cheer. Attempted E-commerce fraud increased during the recent holiday shopping season compared with the same period last year. The following article reports that the data is based on hundreds of millions of online transactions from merchants worldwide.
Fraud attempts on digital retail sales jumped 31% from Thanksgiving to Dec. 31 over the previous year, according to a survey of purchasing data from ACI Worldwide.
Some of the fraud attempts came from the use of credit card numbers purchased in underground chat channels, ACI said.
“Given the consistent and alarming uptick in fraudulent activity on key dates, merchants must be proactive in their efforts to identify weak spots and define short and long-term strategies for improved security and enhanced customer experience,” said Markus Rinderer, senior vice president of platform solutions at ACI.
ACI provides electronic payments technology for more than 5,000 organizations globally. One of its products, ReD Shield, was used to collect the data in the survey. ReD Shield, a fraud detection and prevention software product, was used to process 7% of all Black Friday online spending and 13% of Cyber Monday’s spending.
The data showed that the highest fraud attempt rates were on Christmas Eve and on days when shipments were cut off. The key shopping dates by volume (number of transactions) were Cyber Monday, which showed 15% growth, and Black Friday, which showed 19% growth.
The average sales ticket declined by 7% during the 2016 holiday period. The average was $228 in 2016, down from $243 in 2015. In 2016, one of every 97 transactions was a fraudulent attempt, compared with 1 out of 109 transactions in 2015.
Not surprisingly, the converging forces of the U.S. EMV transition and E-commerce growth contributed to the fraud attempts. Additionally, the regularly occurring security breaches at merchants provide thousands of cardholder records for the fraudsters to use for their online shopping misdeeds. Merchants need to enhance their physical and digital security procedures as well as use one of the many card-not-present fraud solutions from a payment services provider.
Overview by Raymond Pucci, Associate Director, Research Services at Mercator Advisory Group
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