Study: E-commerce fraud risk varies by location

When it comes to fraudulent online transactions, one state in particular may warrant a little extra attention from retailers.



Analysis of millions of 2015 e-commerce transactions by Experian indicates Florida is the overall riskiest state for billing fraud, followed by Delaware; Washington, D.C.; Oregon and California. Billing fraud states are determined by where the consumer whose information was illegally used resides.



Eudora, Kansas, has the overall riskiest billing ZIP Code (66025). The next two riskiest ZIP codes are located in Miami (33178) and Boston (02210).



While Delaware is the overall riskiest state for shipping fraud (the address where fraudulent online purchases are sent), five of the 10 riskiest shipping ZIP codes are located in Miami. The riskiest shipping ZIP code is South El Monte, Calif. (91733). The next four are all Miami ZIP codes.



Interestingly, the least risky shipping ZIP code is in the appropriately named Defiance, Ohio (43512).



The majority of U.S. states are at or below the average attack rate threshold for both shipping and billing fraud, with only seven states — Florida, Oregon, Delaware, California, New York, Georgia and Nevada — and Puerto Rico ranking higher than average.



According to Experian analysis, this indicates that attackers are targeting consumers equally in the higher-risk states while leveraging addresses from both higher- and lower-risk states to ship and receive fraudulent merchandise. Many of the higher-risk states are located near a large port-of-entry city, including Miami; Portland, Oregon; and Washington, D.C., perhaps allowing criminals to move stolen goods more effectively. All three cities are ranked among the riskiest cities for both measures of fraud attacks.



Neighboring proximity to higher-risk states does not appear to correlate to any additional risk. Experian analysis shows Pennsylvania and Rhode Island are ranked as two of the lower-risk states for both shipping and billing fraud. Other lower-risk states include Wyoming, South Dakota and West Virginia.



“Fraud follows the path of least resistance,” said Adam Fingersh, Experian general manager and senior VP of fraud & identity solutions. “With more shipping and billing options available to create a better customer experience, criminals attempt to exploit any added convenience. E-commerce fraud is not confined to larger cities since fraudsters can ship items anywhere.”



Experian analyzed millions of e-commerce transactions to calculate the e-commerce attack rates using “bad transactions” in relation to the total number of transactions for the 2015 calendar year.