E-Commerce Fraud Loss Reaches $57.8 Billion
Account Takeover has replaced Stolen Financials as the fastest growing fraud threat for eCommerce websites in 2017. While still representing only a fraction of the volume of Stolen Financials, in Q2 2017 alone, Account Takeover fraud rose by an alarming 45 percent, putting online retailers at a loss of $3.3 billion dollars. PYMNTS and Signifyd have partnered to track, analyze and report on the recent changes in fraud by examining transactions of more than 5,000 eCommerce merchants in North America, Asia and Europe in the October 2017 Global Fraud Index.
The index analyzes fraud attempts on eCommerce merchant websites, reflected as a percent of eCommerce sales transactions and what’s trending. The industries examined in the study include: alcohol, tobacco and cannabis; apparel; consumer electronics; cosmetics and perfumes; department stores; furniture, appliances and home improvement; health, leisure and hobbies; jewelry and precious metals. Additionally, the index takes a deep-dive on the state of fraud in Australia, where eCommerce fraud is rising rapidly.
Across the board, the fraud rate for transactions valued over $500 was over 22 times higher than for transactions valued under $100. Fraud rates for transactions exceeding $500 increased from 10.93 percent to 11.47 percent, while transactions under $500 showed an overall decrease in fraud rate.
As shown in the report, Account Takeover fraud had begun rising sharply months before the Equifax data breach was announced. But with the breach compromising the personal data of at least 143 million people (nearly 45 percent of American adults), the account takeover fraud trend is unlikely to come to an end any time soon. Deloitte, Sonic, Whole Foods, and even the U.S. Securities and Exchange Commission (SEC) have suffered similar experiences in data breaches of unknown severity.
Global Fraud Index Fast Facts:
- $57.8 billion: value of potential fraud in the eight industries examined in the Index.
- 5.5 percent: increase in total fraud from Q2 2016 to Q2 2017.
- 11.64 percent: fraud rate of transactions exceeding $500, 22 times higher than the rate of transactions worth less than $100.
- 171.9 percent: increase in the rate of fraud in the cosmetics and perfumes industry.
Each index quantifies the rate and changes of fraud attempts on eCommerce merchants by examining different aspects of fraud. Some of these aspects include countries, regions and industries most seriously affected by fraud, as well as what action can be taken to stop or slow fraud trends.