Retail fraud attempts up substantially

Retail sales weren’t the only thing that rose during the 2016 holiday season.



Fraud attempts increased by 31% during the past holiday season, according to data from ACI Worldwide, which, on the positive side, found the number of overall transactions increased by 16%.



The survey data, based on hundreds of millions of transactions from global merchants during the 2015 and 2016 holiday shopping season (starting on Thanksgiving and ending on Dec. 31) highlights key shopping — and fraud activity — trends.



ACI ReD Shield, a premier CNP fraud detection and prevention solution for e-commerce merchants, processed 7% of Black Friday’s online spend and 13% of Cyber Monday’s total online spend.



Principal findings include:



• From Thanksgiving to Dec. 31, 2016 compared to the same dates in 2015, the number of e-commerce transactions grew by 16%, while fraud attempts grew by 31%.



• Fraud attempt rates were highest on Christmas Eve (1.6 %), Shipment cutoff day (1.5%) and Shipment cutoff—express (1.7%). The trends driving these peak fraudulent days include shipment cut-off and buy online pick-up in-store.



• Average ticket price of an attempted fraud transaction decreased by 7% ($228 in 2016, down from $243 in 2015).



Reduced shipment price, low-priced electronics and promotions are driving this trend.



• During the 2016 holiday shopping season, the number of fraud attempts based on total population increased compared to the same time in 2015. In 2016, one out of every 97 transactions was a fraudulent attempt. In 2015, one out of every 109 transactions was a fraudulent attempt.



“Over the 2016 holiday shopping season, merchants experienced significant growth in their digital channels, coupled with a substantial increase in fraud,” said Markus Rinderer, senior VP, Platform Solutions, ACI Worldwide. “Given the consistent and alarming uptick in fraudulent activity on key dates, merchants must be proactive in their efforts to identify weak points — and define short and long-term strategies for improved security and enhanced customer experience.”