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Fraud’s summer blockbuster: high-priced musical instruments

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Amid the trove of Signifyd’s ecommerce data for July comes a most curious statistic. Consumer abuse, which is fraud by real customers trying to scam a merchant, was rampant in the electronics vertical, rising 1918% in July compared to a year ago.

 These customers were extremely busy scheming to acquire the usual popular products of computers and big screens, cameras and phones, but the electronics category with the most fraud attempts is far from the usual, and somewhat bizarre: musical instruments.  

Tubas, anybody?

Consumer abuse was on the rise in July

Consumer abuse attempts in the electronic musical instruments category rose in July an astounding 2268% from a year ago, perhaps enough guitars and keyboards to outfit a few bands, or a music school. Or maybe it was for electric violins, and these fraudsters are more cultural than what their image portends. The usual coveted category of TVs, etc., also showed a huge increase in consumer abuse attempts, up 1332% year over year, according to Signifyd.

In most verticals other than electronics, consumer abuse was in negative figures, but home goods merchants got their share, rising in July 316% in home improvement products and 25% in furniture and decor,  year over year.  

Abusive behavior is when customers make false claims that an item arrived damaged or was significantly not as described when it actually was fine (SNAD); or when a customer claims an item never arrived when it did (INR). These are generally attempts to receive an undeserved refund and get an item for free. Overall in July, SNAD attacks were up 876% and INR rose 252% year over year, Signifyd data shows.

This abusive behavior is also called friendly fraud, since the perpetrator is a customer, and, along with unfriendly fraud, tends to ramp up during times of economic uncertainty, according to D.J. Murphy, editor in chief of Security Portfolio. 

There’s nothing friendly about friendly fraud

“The term friendly fraud was coined when it first emerged during the 2008 financial crisis,” Murphy told the National Retail Federation in June.  “As consumers become more educated on how the rules work and the low-risk level associated with it, they are becoming more likely to engage in friendly fraud.” 

Thankfully for merchants, most customers really are friendly, and though July’s retail numbers aren’t crazy good, they’re solid. Overall sales grew 7% and average order sizes increased by 45% in July from last year. Consumer electronics sales in July were down from June but still up a healthy 25% from this month last year. 

Apparel sales grew 7% and cart sizes rose 5% from this month last year, but July saw an interesting reversal in fashion sale categories: Fast fashion, defined as an average order value of less than $250, led sales last month but dropped in July, while both high fashion (more than $500) and mid fashion ($250-$500) had healthy gains. Luggage sales also rose. After all, we still have some summer left.


What you need to know
  • Sporting goods were a target in July: Fraud pressure on outdoor gear — camping, hiking and fishing — rose 164% in July year over year, while fraud pressure on established customer accounts — a proxy for account takeover fraud attempts — soared 1334% from a year ago.
  • All types of spoofing methods were in play by fraudsters in July, with both device spoofing up 176% and geo spoofing up 293% from a year ago. In device spoofing, tactics are used that mask the device being used to make the order appear to be from a harmless device, such as an iPhone. Geo-spoofing uses tactics that mask/alter the fraudster’s location or mimic the cardholder’s location. Often, VPNs are used to mask IP addresses. 
  • Shoppers are still purchasing gift cards — sales rose 140% in July, year over year, with sporting goods gift cards topping all with a 180% increase in sales.
  • With more products available and in stock, shoppers dusted off their store credit and gift cards and spent 1525% more in home goods. Overall, gift card and store credit spending was up 63% year over year.



It wasn’t just wayward customers who attempted to steal from retailers in July. Bot fraud pressure on customer accounts, which last month was down 45% year over year, rose 338% in July from a year ago, according to Signifyd’s pulse report. Bots were a favorite of fraudsters in July to facilitate attempts on taking over customer accounts, especially in the sporting goods vertical, where attempts on aged accounts rose 1334% in July year over year, Signifyd data shows.  Across all verticals, account takeover attempts on aged, or established, accounts rose 318% year over year.

Fraudsters focus on taking over legitimate accounts

Customer accounts that have a record of good transactions are a favorite target of fraudsters because a retailer will assume an order is legitimate. Fraudsters use bot attacks to try different user name and password combinations to break into existing accounts, which also gives them access to stored gift and credit cards.

Signifyd uses machine-learning models and the intelligence produced by its Commerce Network of thousands of retailers to identify fraudulent and legitimate orders. The rich intelligence produced by the network allows Signifyd to understand the identity and intent behind each transaction. That allows merchants to maximize the number of good orders they ship while being shielded from fraud.  

“Account takeover, when a fraudster secures login credentials and takes over someone else’s online account, is perhaps the biggest current problem for an entire range of digital businesses,”   Murphy told the NRF in June. 

“Data breaches, phishing and social engineering have made billions of these login credentials available to bad actors – and each one gains them access to multiple online accounts. Once a bad actor has illegally accessed someone else’s account, the number of ways that access can be monetized is nearly endless.”

Photo by Getty Images


Maryann Hudson

Maryann Hudson

Maryann Hudson is a freelance writer based in Southern California. She is a former investigative reporter for the Los Angeles Times and the author of two books dealing with issues in youth sports. She is the editor of and a regular contributor to the Signifyd blog. Contact her at [email protected]; or on Twitter @thecensustakers.