'Tis the season for giving and for scamming. With the holidays around the corner, ACI Worldwide is warning that U.S. retailers should brace for a 43 percent growth in fraudulent activity online this holiday season compared with last year.
The data, which is based on hundreds of millions of transactions from retailers around the world, found that card-not-present U.S. online fraud attempt rates are forecasted by ACI to increase 43 percent by volume over the same peak holiday period last year. What’s more, ACI found fraud and new business growth are rising at the same rate around the world, and globally, card-not-present fraud attempt rates are expected to increase by 12 percent by volume. ACI said fraud is moving more online partly because of the adoption of EMV chip cards in the U.S. The study also found fraudsters are targeting cosmetics, cordless headphones, sneakers and other lower-priced items that can be resold on the black market or through auction websites.
“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 activity,” said Mike Braatz, chief product officer of ACI Worldwide, in a press release highlighting the results. “And because fraudulent activity is now considered to be an everyday occurrence, consumers and merchants must take every precaution as we head into peak holiday shopping season.”
ACI Worldwide also found that Africa has the highest online fraud rate with 4.3 percent, while Europe and Asia are tied for second at 3.6 percent and South America is in third with 2.3 percent. North America was last with 1.6 percent. ACI went on to say the expected peak fraud attempt day will be Christmas Eve, with nearly 2.5 percent fraud, due to the popularity of gift cards and last-minute shopping via buy online and pick up in-store. Cyber Monday is now expected to have the highest processing volumes of any day of the year, with Black Friday a close second.
“Merchants need to understand their peak days and the sales that drive those high-velocity times to ensure risk strategies are effective and efficient,” added Braatz. “It’s important to prioritize real-time fraud detection without alienating the consumer experience.”