The largest online fraud product categories are …

Marianne Wilson
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Online fraud numbers for the first half of 20201 continue to be far higher than pre-pandemic levels.

Online shopping fraud is on the rise.

Reports of online shopping fraud more than doubled in 2020, and for the first half of 2021 fraud numbers continued to be far higher than pre-pandemic levels, according to a report by fraud management platform Riskified. The study cited latest the report to Congress by the Federal Trade Commission.

The study analyzed changes in fraud levels for different categories as observed by Riskified during the 2020 holiday season, benchmarked against January of that year. Cosmetics ranked highest in fraud levels, with a 47% increase in fraud attempts. The sneakers category saw an 8% increase in fraud attempts, and digital services and children’s items rounded out the list, with a 12% and 15% increase in fraud attempts from 2020, respectively.

The report also found that fraud attempts related to buy online pickup in store rose during the 2020 holiday season. Compared to January of that year, by December there were over four times more fraud attempts through BOPIS orders. Compared to all other fulfillment methods, BOPIS was 50-70% riskier than average during the fourth quarter of 2020.

According to Adobe’s online shopping forecast for the 2021 holiday season, U.S. online holiday sales will reach $207 billion between Nov. 1 - Dec. 31, 2021. This represents a 10% increase from 2020.

Other highlights from Riskified’s 2021 Holiday Season Report are below.

  • During the holidays, desktop orders are 17% more likely to be fraud attempts than mobile orders.
  • Direct payments such as ACH and wire transfers showed a marked decrease in risk levels, as did buy now pay later solutions.
  • The risk level of credit cards remained fairly stable.
  • The growing popularity of gift cards has resulted in a very volatile risk level for fraudulent transactions.
  • eWallets have become steadily riskier, as their risk level has grown by almost 50% since January of this year.

Fraud continues to play a critical role in shopper acquisition and retention. Seventy-six percent of consumers said they would be unlikely to shop online with a merchant again if they fell victim to an account takeover while shopping with that merchant.

“Mitigating fraud is critical for delivering a superior online shopping experience,” said Peter Elmgren, chief risk officer at Riskified.With eCommerce sales expected to break records this holiday season, retailers should be prepared for the surge in fraud attempts that will accompany it.”

Elmgren said that Riskified’s machine learning platform adapts in real-time to evolving fraud patterns, enabling it to help merchants remove risk from the online shopping experience more quickly and effectively

The full 2021 Holiday Season Report from Riskified can be found here.