Online retailers should brace for a sharp increase in online fraud attempts this holiday season as fraudsters redirect their attention to e-commerce channels amid the U.S. shift to chip cards, two new reports suggest.
ACI Worldwide predicts that e-commerce fraud attempts will rise 12% globally this holiday season compared with last year, but in the U.S. online fraud attempts will spike much higher, reaching 43% by volume, the Naples, Fla.-based payments company said in a Nov. 21 press release.
The holiday card-fraud spree will commence on Thurs., Nov. 24 with fraud measuring about 2% of all transactions, gradually rising to a peak on Dec. 24, the company said in the release. ACI based its forecast on data the company has gathered each year and trends emerging so far in 2016.
A key reason the U.S. is seeing a fraud-spike this year is the expected response by fraudsters to the Oct. 1, 2015 liability shift for counterfeit card fraud, according to ACI. As more merchants adopt EMV, fraudsters are gradually shifting their activity away from stores to e-commerce channels, the firm noted.
But online fraud also is accelerating because of the broader consumer shift toward online shopping. “Fraud is increasing at a rate nearly equal to general retail growth globally—and is exponentially increasing in the U.S. due to a seismic shift from in-store to online (fraud) activity,” Mike Braatz, ACI’s chief product officer, said in the release.
Portland, Ore.-based iovation noted a similar trend in online card fraud. Iovation said in a Nov. 18 press release that online fraud attempts in the U.S. rose 35% over the last year in the wake of the EMV migration. “Now, more than a year (after the liability shift), the bad guys have had plenty of time to adapt their tactics and are in full swing with their online assault,” said Scott Waddell, iovation’s chief technology officer, in the release.
Iovation spotted the uptick in online fraud by analyzed fraud attempts on tens of millions of transactions conducted during November and December 2015 and compared it with transaction data collected over the same months this year, the company said in a Nov. 18 press release.