Monday , September 21, 2020

Fraud Balloons for Electronics Retailers While Post-EMV Online Fraud Abates, Forter Says

Just days before the holiday shopping season begins in earnest, yet another indicator emerges that merchants, especially those selling electronics, should be ready for the onslaught of both legitimate transactions and those perpetrated by criminals.

That’s because the recently released Forter/MRC Fraud Attack Index found that attacks against electronics retailers increased 55% in the third quarter globally when compared to the same quarter in 2016. It’s higher for the U.S. electronics sector where the increase is 62%. Fraud-prevention specialist Forter and the Merchant Risk Council, a merchant group that addresses fraud prevention, produce the index, which examines data from merchants that use Forter’s services.

The report also indicates online fraud may be abating a bit following the U.S. EMV migration that began two years ago, but Forter cautioned this “appears probable.”

The biggest increase, however, is among food-and-beverage merchants, where the attack rate shot up 117%. It’s not that the end goal for a criminal is to get a free meal, but to test the validity of the stolen data they’ve acquired. “Food sites are popular sandboxes for this preparation for larger future theft,” the report said. “Merchants who can’t block testing still lose out.”

Other merchant segments performed better. The attack rate in travel increased 16%. Decreases were seen in apparel, 11%; digital goods, 26%; and luxury, 32%.

“Constant change and continual development characterize today’s online fraud ecosystem,” Michael Reitblat, Forter chief executive and co-founder, says in an email to Digital Transactions News. “Fraudsters are creative, agile, and have easier access to a wider range of tools and data than ever before.”

As online criminals become more sophisticated—they’re using automation like artificial intelligence and machine learning, and researching their victims to widen their scope and scale—the threat increases. “Against this background, it is increasingly vital for fraud-prevention professionals to have a clear understanding of the trends and movements in the world of online fraud,” Reitblat says. “To combat these criminals effectively, it is important to know how they’re working, what they’re doing, and where they’re attacking.”

The breadth and depth of data breaches, especially recent ones (the Equifax breach revealed this summer exposed 145 million consumer accounts held by the credit-reporting agency), “means that fraudsters have direct access to the tools and information they need to commit online fraud,” he says.

The report also suggests the “tsunami” of fraudulent activity emanating from the October 2015 liability shift at the point of sale to EMV chip cards may be abating for online merchants.

New York City-based Forter says the spikes seen in 2015 and 2016 have not repeated in 2017. “In fact, domestic online fraud attacks have decreased by 4%, making the 2017 domestic average attack rate so far 2.32%,” the report said. “This is in comparison to a 5.07% average for international attack rates.”

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