It should be no surprise that payment fraud increased during the recent holiday season as this is the trend each year. What is noteworthy, based on the latest ACI Worldwide benchmark data report on this subject, is what's contributing to that increase.
The report indicates that cross-channel payment fraud increased 13 percent globally during the 2018 peak holiday season, with an increase in "buy online, pick up in-store" being a major target for fraudsters as card-present fraud becomes increasingly difficult. Card-not-present (CNP) fraud has also grown as a result.
“As chip-and-pin credit cards are harder for fraudsters to replicate, it is driving them toward card-not-present, cross-channel fraud,” said Erika Dietrich, global director of Payments Risk for ACI Worldwide. “For example, fraudsters can use stolen credit card information to make a card-not-present purchase online and then simply walk in and pick up the item in-store. We’ll see this trend continue to grow in the coming years, and merchants will need to pay more attention to their omni-channel fraud controls.”
What the study showed is the correlation between an increase in purchase volume (up 16 percent from 2017), and the amount of cross-channel fraud. During the weekend leading into Christmas, buy online pickup in-store purchase rose 20 percent, which is when that peak 13 percent increase in fraud occurred.
Both the volume and value of fraud also increased. The sheet amount of fraud attempts increased by 1 percent during the holiday season, and the value of fraud attempts rose 6 percent this year. Fraud attempts decreased slightly on Thanksgiving Day, Black Friday and Cyber Monday (down 1.24%, 1.3% and .84%, respectively.)
“We saw genuine consumer transactions outpace fraudulent transactions this past holiday season as merchant fraud strategies kept pace in the market. In addition, merchants have become more savvy as they are spreading out the volume of sales earlier in the holiday season (October through November) compared to years past, to reduce fulfilment and delivery bottlenecks,” Dietrich noted in the report summary.
What Financial Institutions Can Do about Holiday Card Fraud
During this past holiday season, Rippleshot shared our tips on fighting fraud during these days that attract more activity from fraudsters. As most FIs have learned, the holiday season is also a busy time for fraudsters who prey on customers and financial institutions who are reluctant to decline a transaction or re-issue cards.
Issuers must educate cardholders on making safe purchases and monitoring their cards frequently. For FIs, it’s important to implement real-time monitoring for fraudulent or unusual patterns, increase customer interactions, and minimize re-issuance disturbance. After the holiday season, issuers should follow-up with fraud transactions and compromised card analysis in order to perform a more targeted, efficient re-issuance process. Following the holiday season, FIs should determine where gaps exist by investing in better and faster technology tools.
Catch our Top 4 tips on what FIs should do throughout the year to combat holiday card fraud. While the 2018 holiday season has passed, the season for fraudsters is never ending. Get ahead of the fraud storm by thinking proactively about how to combat card fraud. Our State of Card Fraud 2018 shares insight into this market and how the problem is evolving — helping you prepare for what may be in store for 2019.
Catch this year's prominent fraud trends, how much they're costing financial institutions, and what concerns top fraud team's lists.