Online Fraud Attempts During 2017 Holiday Shopping Season Up 22% Over Previous Year

Online fraud attempts in the U.S. during the 2017 holiday shopping season increased by 22 percent. The insight comes from new ACI Worldwide benchmark data gathered from top U.S. merchants.

Online Fraud During the 2017 Holiday Season

The report reveals fraud attempts were highest on Thanksgiving day, Christmas Eve and and Dec. 21 –the all-important cutoff day for getting items express shipped in time for the holiday.

The 22 percent jump coincides with a 19 percent increase in overall transactions during the holiday shopping season. Higher volumes mean more opportunities for criminals to take advantage of the pressures of the moment.

Pressures affect companies of all sizes, but for small businesses operating in the digital and physical world, the impact of fraud can be more detrimental. As more sales come from digital channels, owners must implement security solutions to mitigate fraud attempts from succeeding.

“The consistent, alarming uptick in fraudulent activity on key dates is a signal that merchants must be proactive in their efforts to identify weak points across the omnichannel payment process — and define the short- and long-term strategies necessary to improve security and enhance customer experience, “ said Erika Dietrich, Director of Risk Management at ACI Worldwide, in a press release announcing the findings.

ACI gathered its data for online fraud attempts during the holiday season from ReD Shield. ReD Shield is the ecommerce fraud prevention portion of ACI’s business providing real-time, multi-tiered protection for merchants, payment service providers and independent sales organizations. The data represents hundreds of millions of transactions processed by the company.

ReD Shield handled 14 percent of all Thanksgiving Day online spend, 13 percent of all Black Friday online spend, and 9 percent of all Cyber Monday online spend.

Key Points From the Benchmark Data

The data were compared with the same period in 2016. The conclusion? Thanksgiving Day had the highest number of online fraud attempts, up by 1.9 percent from 1.26 percent in 2016. For Christmas Eve, online fraud attempts were up by 1.78 percent from 2016s 1.48 percent. For December 21, the cutoff date for express shipments, online fraud attempts rose 1.67 percent, up from 1.49 percent for the previous year. Only one out one out of every 109 transactions was a fraud attempt in 2015. And this rose to one out of 97 transactions in 2016. But in 2017,  one out of 85 transactions was a fraud attempts, a trend that has experts worried.

When it comes to the value of the attempted fraud transactions in 2017, the average ticket price was $227 over the entire holiday period compared to $239 in 2016. Although the price was lower in 2017, the volume was higher.

According to ACI, the jump in fraudulent activities for the specific dates was attributed to shipment cut-off, consumer traffic, and buy online pick-up in-store transactions.

Protecting Your Online Customers

Online fraud is expensive in terms of monetary loses and damage to the reputation of your brand. The December 2017 Online Fraud Trends and Behavior report from Stripe revealed a small online retail business can end up spending $2.62 battling back against online fraud for every $1 of a fraudulent order.

If you are not proactive and don’t have the right security measures in place, your online presence will suffer greatly, not only during the holiday season but year round.

Photo via Shutterstock

This article, "Online Fraud Attempts During 2017 Holiday Shopping Season Up 22% Over Previous Year" was first published on Small Business Trends