Click & Collect Fraud Up by 55% Following Shift to Online Shopping

Buy online, pick-up in store fraud rose by 55% in the first half of 2020, according to the latest edition of the Forter Fraud Attack Index, published today. The study demonstrates that e-commerce is increasingly being targeted by fraudsters following the huge shift to online shopping since the start of the COVID-19 pandemic.

There has been a substantial increase in the number of new customer accounts, now representing 30% of all transactions – which is around five-times higher than pre-COVID levels. Forter said this phenomenon is posing cybersecurity issues for online traders, as it is more difficult for legacy fraud systems to identify legitimate new users from fraudsters due to lack of data. This growth in new users is also likely to lead to high false decline rates, which are five- to seven-times higher in new users compared to returning users.

The report also noted that the dramatic increase in legitimate online transactions has meant that the proportion of fraud attacks has actually decreased, and this could be giving retailers a false sense of security, as the number of fraud cases have gone up in real terms.

Another finding was that fraud attacks targeting digital currency gift cards increased by five-times the normal rate. Additionally, attacks on downloads of apps and music were three-times higher than usual, while for consoles, the volume of fraud attacks were twice as high.

Despite transaction volumes for the entire travel sector falling by 97% during the peak of the early COVID-19 outbreak, the study revealed that hotel fraud attacks rose 139% and airline fraud attacks increased 144% compared to the first half of 2019.

Forter also stated that despite there being a 5% decrease in account takeover (ATO) this will rise substantially in the coming months as fraudsters are currently harvesting data to use, possibly during the holiday season. It added that losses from ATO are expected to reach 25.6bn for the whole of 2020.

Speaking to Infosecurity, Michael Reitblat, CEO of Forter, commented: “As COVID-19 conditions began, some merchants were better prepared than others to scale their digital channels. However, with a quick shift to digital and a prioritization of business solvency, security measures and fraud prevention may have come as an afterthought for some.

“Based on our experience, the most successful merchants have been able to quickly adapt their digital channels alongside their fraud prevention and security precautions. Over the past few months, some of our merchants in industries like apparel and food and beverage have seen online demand increase between 300% and 400% per day. By automating their fraud prevention and making decisions on transactions in real time they’ve been able to seamlessly support this new demand while simultaneously protecting their business and without adding friction to their customers’ experience.”

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