eBay Enterprise: Don’t fall for online fraud myths

Digital gift cards are less risky than retailers think, and that’s not the only common piece of online fraud “wisdom” that is false.



The Technology Fraud Lab at eBay Enterprise has released a list of five online fraud myths. These include:



• Myth #1: Digital gift cards are too risky to sell.

Digital gift cards are an extremely popular choice among good customers and the volume of good orders outweighs the fraudulent attempts. Retailers should be aware criminals try to blend their activities in with normal customer traffic, often fraudulently purchasing digital gift cards at the same time consumers typically return unwanted gifts in exchange for store credit.



• Myth #2: High distance, high dollar, high expedite equals high fraud risk.

Greater distances, more expensive dollar values and quicker shipping options do not guarantee fraud, just as short distances, inexpensive dollar values and slower shipping do not ensure legitimate orders. Retailers should apply additional metrics to find truly fraudulent transactions.



• Myth #3: Machine learning can replace manual review.

There are nuances in some good orders that even the most sophisticated computer programs mistakenly label as fraud.



• Myth #4: International orders are more risky than domestic ones.

More than 97% of orders shipping internationally for eBay Enterprise clients have been legitimate.



• Myth #5: Freight forwarders are inherently bad.

Freight forwarders, also known as mail forwarding companies, have a negative reputation as platforms for online fraud, but hundreds of thousands of good transactions flow through freight forwarders every year.



eBay Enterprise research also shows that many criminals also prefer to keep a standard Monday through Friday schedule. The company reports a spike in fraudulent attacks on Wednesdays at 8 a.m., just in time for deliveries to arrive before the weekend.



eBay Enterprise also found that the highest fraud attack rates per state span the entire U.S. It also identified pockets of freight forwarding in coastal areas where merchandise can be more easily shuttled to international customers. While many authorized purchases pass through freight forwarders, certain product categories such as jewelry and electronics experience higher rates of freight forwarding fraud and may warrant greater scrutiny.



“There is no question that managing online fraud is a top imperative facing retailers today,” said Tobias Hartmann, president of eBay Enterprise. “Ensuring the right mix of automated and manual review is essential, but can be difficult for businesses to navigate on their own, as we’ve seen criminals try to find weak spots in fraud prevention by bombarding retailers with attacks. Many fraud management strategies employed by retailers can cause more harm than good.”