During the 2020 pandemic, e-commerce increased exponentially. US online sales increased by 44% as an increasing number of consumers took their business online, rather than taking the chance of going into the stores for their purchases. With that increase in online sales came an immense shift for businesses as they changed their overall models to correspond with the changing needs of their audience.
It also created a shift in cyber threats. Not only were more cybercriminals also spending more time at home, which could provide them with the freedom to create more attacks and find more vulnerabilities, but the increase in online shopping also served to underscore the opportunity available to those criminals. As a retailer, you must be aware of the rise in fraud in the e-commerce marketing space. Are you familiar with--and prepared for--these frauds, which are a more potent threat in 2021 than ever before?
Account takeover attacks increased 282% in 2020 alone. An account takeover attack is exactly what it sounds like: an opportunity for a hacker to take over someone else's account. That may mean that the hacker breaks into a customer's account, using that information to make fraudulent purchases, especially in the online gaming industry, where the conversion between real and virtual currency happens in the blink of an eye. Throughout 2021, those account takeover attacks are set to increase substantially, particularly as hackers gain access to more automated strategies that can help them break into accounts more easily.
Phishing attacks, according to the FBI, nearly doubled in 2020. In order to conduct a phishing attack, fraudulent individuals pose as a representative of a trusted company and try to use those false credentials to get access to vital customer information. Often, the representative may claim to be from a large company: someone with whom most people have accounts and, therefore, are likely to trust. PayPal and Amazon, for example, are common targets. Other scams, however, may target small business accounts, which people may be more likely to assume are not worth the time to breach--and all too many people fall prey to those scams. Hackers can then create fraudulent transactions on those users' accounts, which may take time to remedy--and cost a great deal for a business that allows those fraudulent transactions to go through.
Most people have robust credentials that make it possible for them to create online accounts. They have accounts with major retailers and may even use biometric scans, including facial or fingerprint recognition, to help them establish their accounts. That presence on other websites and with other major retailers makes it easier for them to establish accounts in other locations.
Then the truth comes out: the identity used to make those purchases doesn't really exist.
For retailers, that can come as a heavy blow. If the retailer does not recognize the synthetic identity for what it is in time to stop a transaction, usually one made with fake payment information that does not connect back to an actual person, the retailer can end up out the money for that attack. Criminals use real-life details, like real addresses, to create completely fictional people. They may even use fake biometric scan data to make it easier to bypass security controls on the websites they use most often. While these may create fewer identity threats for private consumers, they can create immense challenges for businesses, who may find it hard to recognize the difference between fake profiles and real ones.
Chargebacks offer a vital opportunity for consumers to dispute charges on their records that they did not make. Unfortunately, chargebacks, also known as "friendly fraud," can create serious problems for retailers due to the lost costs. The switch to online retail led to a significant increase in chargebacks--and more than doubled fraudulent chargeback requests. Customers make a purchase, pick it up or have it shipped, and then deny getting the items they requested. Unfortunately, many stores have few resources available that will allow them to prove that they did, in fact, send out exactly what the customers requested. Buy Online, Pick Up In-Store shopping--which increased substantially throughout 2020--can also substantially increase the result of chargeback fraud since most stores do not have good systems in place for checking potential errors in what they provide to their customers.
Many popular online payment options allow for "buy now, pay later" shopping: a choice that can allow consumers to pay off larger purchases, or even smaller ones, over time. With the economic uncertainty present in 2020, many customers chose this option to spread out the time needed to pay for their goods. Unfortunately, it can also open up more avenues for fraud, since there is a longer delay between the time of the initial transaction and the point at which the customer pays off the purchase.
Economic uncertainty has hit a wide number of consumers throughout 2020. Many people are struggling to recover from the financial losses they may have faced throughout the pandemic. As a result, they're taking advantage of whatever promotions they can. Some are bringing in items for refunds, including pressing for refunds that may be outside the policy or that will prevent a retailer from reselling an item. Others are taking advantage of promotions, from using a one-time-use promotion more than once to convincing unwary cashiers to "stack" promotions that aren't intended to go together. Over time, this can substantially damage a company's profits, especially in the case of small businesses, which may have fewer resources on hand in the first place.
2020 brought with it a number of opportunities in the e-commerce space. Many of those opportunities seem likely to continue as customers maintain some of their new buying habits--especially the ones that offer a higher level of convenience. However, some of those conveniences also offer immense opportunity for fraud. Is your business prepared for the frauds likely to appear in the e-commerce marketing space in 2021--and the ones that are already there? Contact us today to learn more about how we can help support your business and decrease the losses you face from fraud during this challenging time.
Orbis Solutions, Inc., in Las Vegas, Henderson, Summerlin and throughout Nevada, has developed creative, strategic and cost-effective technical solutions for a wide variety of clients. Offering a diverse range of products and services, Orbis provides IT solutions to promote your company’s productivity and profitability, and help you sort through the latest-hyped technology, so you can select the best hardware, software or service for your business needs.