As brick-and-mortar retailers continue the widespread adoption of EMV technology to combat credit card fraud, fraudsters are migrating to the ecommerce space where credit card information is more vulnerable to theft. We advise that online merchants maintain a vigilant eye, even over items you would least expect to be targeted for theft. We examined more than two million online transactions across thousands of our customers spanning a variety of industries to produce the first-ever Grinch Who Stole Christmas-themed “Cyber Grinch” report. Among our findings, Patagonia cocktail dresses have the highest ratio of fraud attempts to legitimate purchases.
We found that the top categories of products most affected by attempted fraud are pet products, 3D printers, gift cards and books. Somewhat ironically, business law textbooks accounted for a significant portion of fraudulently ordered books. Other findings show merchants are 30 percent more likely to experience a fraudulent medical equipment purchase than a fraudulent energy drink purchase, 26 percent more likely to experience a fraudulent pet food purchase than a fraudulent shoe purchase, and 12 percent are more likely to experience a fraudulent gift card transaction than a diaper transaction. The items listed below are the top 10 products that have the highest percentage of fraud attempts out of total number of items bought in that category:
- Patagonia Cocktail Dresses
- Smith and Roberson’s Business Law Textbook
- Taste of the Wild High Prairie Dry Dog Food
- CVS Gift Card – Swappable Physical
- CVS eCert – Gift App
- Printer Cartridges (incl. 3D)
- Taste of the Wild Wetlands Dry Dog Food
- 3D Printer
In addition, some of the most unexpected items stolen online were candy, diapers and energy drinks.
“Fraudsters are typically looking for commonly purchased products because they have good resale value,” explains Stefan Nandzik, Director of Marketing at Signifyd. “In order for them to scale their operations, they need to offload stolen products quickly. If they offer goods like diapers and pet food for below market value on a secondary market, they can monetize rapidly and easily, because price-conscious customers will jump on the chance to buy name-brand products at a lower price.”
The upward trend of fraud losses as a portion of revenue for all merchants continues in 2015 at 1.32 percent, up from 0.68 percent in 2014. The loss is even higher for international merchants at 1.56 percent. It’s estimated that merchants take another 3 percent loss when it comes to transactions wrongfully declined. Some consumers have adopted the use of more secure tokenized payment systems like Apple Pay, but that only accounts for one percent of all U.S. retail transactions and is extremely unreliable for online transactions. Since consumers and banks aren’t liable for online fraudulent transactions, ecommerce retailers need to take their own precautionary measures, and they can’t neglect those less valuable items either.
The data was collected from over two million online credit card transactions, across thousands of ecommerce merchants, during the month of October. The likelihood of a purchase being fraudulent was determined by running the sample through a fraud scoring engine. The resulting data was categorized by specific products in addition to the broader retail categories those products fall into, then the number of fraudulent purchases was compared to the total number of purchases in each respective category. These comparisons were used to rank the products from most likely to least likely to be affected by fraud, as shown in the list above.