Management & Finance

Online Fraud in 2021 Is Booming

Fraud-prevention expert Uri Arad will give an exclusive, live-stream presentation to the CommerceCo by Practical Ecommerce peer-to-peer community on Thursday, January 21, at 2:00 p.m. Eastern Time.

Arad is co-founder of Identiq, a privacy-protecting, network-based service that helps merchants identify legitimate consumers the first time they shop. It’s critical, as fraudsters are increasingly sophisticated and can look like a regular shopper.

Uri Arad with Identiq

Uri Arad

During the presentation, CommerceCo members will learn what potential fraud threats could harm their businesses in 2021 and what options they may have to protect their companies.

The presentation is exclusive to the CommerceCo by Practical Ecommerce community, which is made up of experienced professionals from retailers and brands. Membership in the community is paid, meaning only serious ecommerce pros participate. Members can discover products and techniques to improve their companies, network with peers to advance their careers, and learn skills to better themselves.

Ecommerce Booms, Fraud Looms

Ecommerce sales dramatically increased in 2020. Unfortunately, with the boom came a commensurate increase in card-not-present fraud.

Retail ecommerce sales in the United States grew by 20-to-40 percent in 2020, depending on one’s source.

The United Census Bureau, for example, reported on November 19, 2020, that “the third quarter 2020 ecommerce estimate increased 36.7 percent from the third quarter of 2019 while total retail sales increased 7.0 percent in the same period. Ecommerce sales in the third quarter of 2020 accounted for 14.3 percent of total sales.”

“We’ve seen ecommerce accelerate in ways that didn’t seem possible last spring, given the extent of the economic crisis,” said Andrew Lipsman, eMarketer principal analyst. “While much of the shift has been led by essential categories like grocery, there has been surprising strength in discretionary categories like consumer electronics and home furnishings that benefited from pandemic-driven lifestyle needs.”

eMarketer estimated that U.S. ecommerce sales were up 34.2 percent in 2020 compared to 2019. And the list could go on with estimates from dozens of other surveys, all saying the pandemic drove more sales online.

Fraud Opportunities

The shift to ecommerce has opened the door for crime. With retailers processing more orders, offering new channels like curbside pick-up, or adding ecommerce for the first time, fraudsters had new opportunities for attack.

Writing on the Identiq blog, Shoshana Maraney, Identiq’s content and communications director, described three of the many fraud trends that could impact merchants in 2021: buy-online-pick-up-in-store fraud, refund fraud, and account takeovers.

Maraney wrote, “The reason that refund fraud has taken off like a rocket recently — to the extent that few businesses have really caught up yet with quite how much money they’re losing — is that this has become a winning business model for fraudsters.”

“Criminals now offer refund fraud services. All the customer has to do is place the order, and the fraudster will take care of the rest. The customer will get to keep their order for free, paying the fraudster a small percentage of the cost of the item. The retailer bears the cost.”

Logo: CommerceCo by Practical Ecommerce

Arad’s presentation will describe the state-of-the-art methods for preventing card-not-present fraud in its many forms. What’s more, CommerceCo presentations are not just another webinar. Members can speak directly with Arad, asking him their own questions and even appearing on screen with Arad, if they like. I will be the moderator.

Finally, as with all weekly CommerceCo presentations, the video recording will be available to members.

Armando Roggio

Armando Roggio

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