Ecommerce experts are expecting a rise in consumer fraud, even as — or perhaps because — global ecommerce will increase by 27% this year. Ecommerce has already grown by 21% in September 2020 compared to September 2019.
Additionally, as a Forbes article by PayPal reported, Black Friday and Cyber Monday (BFCM) shoppers spent $16.8 billion online last year. And despite the recession, the industry is expecting bigger numbers this year as more people are staying home. (So don’t expect the huge in-store holiday crowds this year, but everyone who’s there will probably be cranky.)
Forbes is also expecting, at least within the United States, there will be a boost in some favorite gift-giving categories: “health and beauty up 23%, consumer electronics rising 20%, fashion up 19%, and home furnishings growing 16%.“
We’ve talked repeatedly about how fraud has increased this year as a result of the pandemic. And as ecommerce grows, fraud grows right along with it as crooks try to take advantage of people who are new to ecommerce. There has also been an increase in friendly fraud as more and more people are using food delivery services like Door Dash and Uber Eats.
And Forbes is predicting there will be an increase in home-based shopping, whether it’s home improvements or even just holiday decorations. That’s based on the possibility that people won’t be traveling for the holidays nearly as much, and that more people will avoid holiday parties and family gatherings. As a result, they’ll want to improve and decorate their homes, since that’s where they’re spending most of their time.
They think this will also contribute to increased gift-giving, as people are giving more presents “to substitute for time spent apart.”
Yes, there’s nothing like holiday guilt to make the shopping season brighter.
Where Will Consumer Fraud Grow?
But the expected growth factor this holiday season centers buy-online, pick-up in-store, or BOPIS, especially as it relates to electronics. Because there has been an increase in account takeovers and stolen credit cards, BOPIS has become a favorite for crooks and fraudsters: there’s no need for delivery to your home, and you can execute several purchases at different stores before a card gets shut down.
That’s because the BOPIS purchase is typically a card not present (CNP) purchase made online, and many merchants don’t require CVV confirmations or account verification when allowing these purchases, which makes them more prone to fraud through stolen credit card numbers.
BOPIS is already growing as a viable option for consumers as more and more companies are creating BOPIS options for the 2020 holiday season, which means fraudsters will follow the path of least resistance.
Finally, expect the shopping season to start earlier as people worry about inventory shortages. If you don’t have backup suppliers available yet, now is the time to start looking. If one of your regular suppliers has a shortage or weather-related delay, you don’t want to get caught in a pinch. Use a retail sourcing system like this one to start finding suppliers now instead of waiting until you’re stuck.
There are a few things every merchant should do to protect against consumer fraud, whether you’re an ecommerce merchant or a bricks-and-mortar retailer.
- Check IDs on all BOPIS purchases. That also means asking to see the credit card used to make the original purchase.
- Add a CVV field to your online shopping cart.
- Participate in Verifi’s Order Insights program. That helps cut down on the number of disputes and chargebacks you get hit with.
- Make sure your in-store credit card equipment is EMV compliant. Merchants not using EMV-compliant credit card readers are responsible for fraud-related chargebacks.
To learn more about how CB-Alert can help you reduce and prevent chargebacks, please visit the CB Alert website.
Photo credit: Stevepb (Pixabay, Creative Commons 0)