New research shows criminals are becoming more creative where, when and how they take advantage of the season, as the number of fraudulent purchases increases proportionately when sales peak during the holidays.
eBay Enterprise’s Holiday Fraud Index revealed five fraud myths identified by the company’s Fraud Technology Lab. Fraud experts at eBay Enterprise debunked these myths to help retailers and brands boost holiday sales and delight customers during the busiest time of the year.
Data from orders processed by eBay Enterprise shows that fraudsters go to great lengths to blend their activity in with legitimate orders. Criminals choose to fraudulently purchase digital gift cards at the same time consumers typically return unwanted gifts in exchange for store credit. Many criminals also prefer to keep a standard Monday through Friday schedule, given that lab researchers see a spike in fraudulent attacks on Wednesdays at 8 a.m., just in time for deliveries to arrive before the weekend.
eBay Enterprise’s Fraud Technology Lab found that the highest fraud attack rates per state span the entire U.S. It also identified pockets of freight forwarding in coastal areas where merchandise can be more easily shuttled to international customers. While many authorized purchases pass through freight forwarders, certain product categories such as jewelry and electronics experience higher rates of freight forwarding fraud and may warrant greater scrutiny.
The Holiday Fraud Index exposes five myths that can end up hurting a businesses’ bottom line:
• Myth #1: Digital gift cards are too risky to sell.
• While digital gift cards can be intimidating for retailers because they are the equivalent of cash and are delivered quickly, they do not need to be viewed as too risky to sell. Digital gift cards are an extremely popular choice among good customers and the volume of good orders outweighs the fraudulent attempts.
• Myth #2: High distance, high dollar, high expedite equals high fraud risk.
• Greater distances, more expensive dollar values and quicker shipping options do not guarantee fraud, just as short distances, inexpensive dollar values and slower shipping do not ensure legitimate orders. It is dangerous to rely on only one of these metrics when crafting a fraud prevention strategy. Additional attributes should be layered on to help retailers find truly fraudulent transactions.
• Myth #3: Machine learning can replace manual review.
• Although it is important for ecommerce to improve technologically to combat unauthorized activity, it is just as important to understand the value of manual review. There are nuances in some good orders that even the most sophisticated computer programs mistakenly label as fraud.
• Myth #4: International orders are more risky than domestic ones.
• International orders are tricky for retailers, but more than 97 percent of orders shipping internationally for eBay Enterprise clients have been legitimate.
• Myth #5: Freight forwarders are inherently bad.
• Freight forwarders – also known as mail forwarding companies – have a negative reputation in some ecommerce circles, but hundreds of thousands of good transactions flow through freight forwarders every year.
For data, background and forecasts on Holiday Fraud: Search CardWeb.com’s CardFlash® Library of more than 58,000 archived articles; Access CardWeb.com’s CardData® for current and historical Performance, Portfolios, Profiles, etc. Visit RAM Research® (ramresearch.com) for quarterly and annual forecasts covering more than 150 metrics. [complimentary or deeply discounted access to CardWeb.com subscribers].
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