Global Fraud Index October 2017
Heading in to the holiday rush, online retailers are on high alert for fraud following the recent Equifax data breach. But what does the data say? Have fraud losses risen since a year ago? Unfortunately, the answer is yes. While ecommerce merchants did a good job fighting fraud at the start of the year, fraudsters fought back in Q2 with total fraud losses rising 5.5% from 3.64% in Q2 2016 to 3.85% in Q2 2017.
5 out of the 8 of verticals measured showed increased fraud losses with Cosmetics & Perfumes being hit the hardest. Across the board, fraud losses increased for all 3 fraud types with a significant rise coming from Account Takeover fraud which will be further exacerbated by the Equifax data breach.
Every quarter a special segment of the report examines a specific country and for Q2 2017 the focus is on Australia, where fraud has risen significantly over the past few quarters.
Sign Up For The Discussion
Join PYMNTS CEO Karen Webster and Signifyd’s Sourabh Kothari for a detailed look at how fraud rose in Q2 2017 and what you can do to protect yourself going in to the holiday season.
Date & Time: Thursday, October 26 – 12:00 PM (ET) to 1:00 PM (ET)
Guest: Sourabh Kothari, Director of Merchant Advocacy
Fraudsters Are Fighting Back
Despite initial improvements made by ecommerce merchants at the start of the year, fraudsters fought back in Q2 with total fraud losses rising 5.5% from 3.64% in Q2 2016 to 3.85% in Q2 2017.
With the recent Equifax data breach, Account Takeover fraud is expected to rise quickly and merchants need to leverage 3rd party solutions with real-time data identifying which user accounts (email, social, cards) have been identified as compromised.
The silver lining in the Q2 2017 data may be the success merchants have had in reducing Friendly Fraud. Merchants can learn how to keep Friendly Fraud low by leveraging certain best practices that have worked for merchants in similar industries.
Cosmetics & Perfumes
Growing demand for cosmetics has led to an alarming growth in fraud. While fraud rates were declining heading in to 2016, they have recently climbed back up significantly. Between Q2 2016 and Q2 2017, fraud rates more than doubled from 1.45% to 3.95%.
Furniture, Appliances, Home Improvement
Based on an increase in transaction decline rates across the industry, online and omnichannel furniture merchants may be losing more to “false declines” than chargeback losses, as they continue declining legitimate orders due to fear of fraud.
With Amazon and Alibaba growing their respective market shares in Australia, the growing ecommerce landscape has seen a significant rise in fraud. Merchants selling higher end apparel, consumer electronics, furniture and home appliances are especially susceptible to fraud losses in this market.