Fraudsters Shift Focus to Exploit Gaps in Merchants’ Fraud Prevention Strategies, Threatening $18T Global Market
Forter, the leader in e-commerce fraud prevention, announced the release of the seventh edition of its Fraud Attack Index. The report tracks shifting behaviors in online businesses across a variety of industries.
The latest edition of the Fraud Attack Index indicates that fraud is evolving rapidly beyond the point of the transaction to accounts such as loyalty programs and abuse of return policies. Loyalty fraud increased by 89% year over year, while the total dollar amount in online fraud increased by 12% year over year.
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“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.”
The Fraud Attack Index shows that fraudsters are having significantly more success in account takeover (ATO) attacks. 1.5M individuals whose accounts had already been compromised had additional accounts opened in their name. Fraudsters transfer funds to these accounts from their victims’ legitimate accounts. This represents a factor of two increase from the previous high.
“A second trend,” continued Reitblat, “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.”
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Taking advantage of silos that separate brick and mortar and online operations, Buy Online Return In-Store (BORIS) fraud increased by 23%, and Buy Online Pickup In-Store (BOPIS) fraud also increased by 23%. Coupon abuse likewise saw an increase of 10%.
“Today, the customer journey has become more complex as consumers engage with brands and products across numerous touchpoints for a truly omnichannel experience,” noted Jordan McKee, Research Director at 451 Research. “The data in the latest Fraud Attack Index is proof that, as the global payments and e-commerce 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.”
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