State of Fraud Report 2021
U.S. retailers will face a new era of online fraud this holiday season featuring attacks that are more abundant, more automated and more diversified in terms of techniques and targets, according to a report published today by leading commerce protection provider Signifyd.
Ecommerce sales accelerated during and in the aftermath of the COVID-19 pandemic, Signifyd’s data showed, and fraud in various forms accelerated with it. Signifyd’s State of Fraud Report 2021 found:
• A 146% increase in automated fraud attacks in 2020.
• A doubling of consumer abuse — including false claims that an order never arrived — in the first half of 2021.
• A 350% increase in fraud pressure — orders deemed to be fraudulent — by mid-2021.
The pandemic ushered in a “golden age of ecommerce fraud” fueled by several factors, the report says. Ecommerce’s increasing share of retail revenue, a dramatic wave of first-time online shoppers and the need for fraud rings to move away from well-protected segments of the buying journey to attack more vulnerable targets are all contributing to a fraud landscape not seen before.
“What I’ve noticed this year is that the fraud we are seeing has become more complex, particularly with the occurrence of account takeover fraud increasing,'' said Luz Cervantes, Signifyd manager of risk intelligence. “So many more accounts can and are being compromised across the board, and I don’t see it stopping anytime soon, especially during the holidays.”
In particular, the State of Fraud Report highlighted several types of attacks that have morphed and are likely to remain prevalent through the crucial holiday shopping period and well beyond. Those include innovations or increases in:• Account takeover
• Curbside and buy online, pick up in store schemes
• False item not received claims
• Return fraud
• Automated card testing
• Synthetic Identities
• Mule Fraud
• Promotion abuse
• Unauthorized reselling
“In our recent Global Payment and Risk Mitigation Survey, the majority of merchants surveyed reported increases in synthetic and account takeover fraud over the previous year," John Winstel, global head of fraud product at FIS, says in the report. "As these and other new fraud trends emerge, the safeguarding of a merchant’s revenue requires smart, dynamic protection against fraud throughout the payment lifecycle.”
The report notes that successful fraud and risk teams are changing their very nature in order to keep up with the rapidly evolving fraud challenges they face. The emphasis has moved away from loss prevention to a focus on optimizing the enterprise’s business potential.
The transformation of online fraud and the strategies to combat it take on a new urgency as online sales make up a rapidly growing segment of overall retail revenue. Since the early days of the pandemic, retailers have frequently found themselves dealing with online orders approaching holiday season volumes.
The key message of Signifyd’s State of Fraud Report 2021 appears to be that this dynamic period of fraudulent activity is not a blip to be suffered by retailers and forgotten, but a steady state of the new normal.