Most global retailers are predicting an increase in fraud budgets next year, with nearly half seeing an increase in attacks, according to new data from Ravelin.
The fraud prevention software vendor polled over 1000 merchants globally to understand their current challenges.
It revealed that 45% are seeing an increase in account takeover (ATO) attacks. These efforts aim to hijack consumer accounts to tap them for any stored personal information which could be monetized on the dark web. Attackers may also try to use stored cards to purchase goods fraudulently, or to sell access to the accounts on underground sites.
Ravelin claimed that ATO attacks are on the rise due to shoppers’ password reuse across multiple sites. When one is breached, fraudsters can use these in credential stuffing operations to try them across multiple other sites.
An Akamai study from October 2020 claimed that over 60% of credential stuffing attacks detected over the previous two years were targeted at retail, hospitality and travel businesses, with the lion’s share (90%+) affecting retailers.
Nearly 40% of fashion and FMCG retailers claimed online payment fraud is now their biggest fraud risk, the Ravelin report also found.
So-called refund abuse, or “friendly fraud,” where consumers wrongly claim they never received a product they ordered online, has increased for half of respondents. This could be attributed to the pandemic; first-party fraud like this often spikes during periods of financial crisis, where money is tight and usually law-abiding individuals are tempted to lie.
The surging fraud levels are at least being met with a firm response, as 76% of retailers predicted their organization would increase fraud budgets in the next 12 months, and 20% said the increase would be “significant.”
Ravelin CIO Mairtin O’Riada argued that the pandemic has created “a veritable petri dish” to grow fraud volumes.
“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,” he added.
“Trying to detect fraud manually under these conditions is a difficult and expensive undertaking.”