Since the World Health Organization (WHO) declared the novel coronavirus outbreak a pandemic on March 11th, new research by TransUnion identified a 23% increase in weekly e-commerce transactions the following week.
While somewhat predictable, the growth in the e-commerce transactions was also accompanied by an increase in fraud, as researchers found 22% of Americans said they have already been targeted by digital fraud attempts related to COVID-19.
“It is clear that social distancing has changed consumer shopping behaviors globally and will continue to do so for the foreseeable future,” said Greg Pierson, senior vice president of business planning and development at TransUnion. “No doubt fraudsters will continue to follow the trends of good consumers and adjust their schemes accordingly.”
E-commerce fraud activity growing
The findings come as the company released its Global E-commerce in 2020 report. TransUnion Global Fraud & Identity Solutions reported a 347% increase in account takeover and a 391% rise in shipping fraud attempts globally against its online retail customers in 2019 compared to 2018.
The growth in e-commerce has been accompanied as well by increased use of mobile devices for online shopping and B2B e-commerce. This move to mobile resulted in 118% growth in potential fraud originating from mobile devices last year, compared to the year before.
“With so many reported data breaches, it’s not just about if your account will be hijacked, it’s about when,” said Melissa Gaddis, senior director of customer success for TransUnion Fraud & Identity Solutions. “Once a fraudster breaks into an account, they have access to everything imaginable resulting in stolen credit card numbers and reward points, fraudulent purchases, and redirecting shipments to other addresses.”
Typical methods used to take over accounts include buying login details on the dark web, credential stuffing, hacking, phishing, romance scams, and social engineering. Shipping fraud is also used when criminals take over a customer account but don’t change the shipping address in order to avoid detection. Once the package has shipped, they intercept it at the carrier site and change the shipping address.
E-commerce fraud trends
Besides account takeover and shipping fraud, TransUnion revealed other significant e-commerce fraud and transaction trends:
- 42% decrease in promotion abuse from 2018 to 2019. Cybercriminals access accounts to drain loyalty points or create multiple new accounts to use the same promotion over and over, often against website and app terms. TransUnion believes this decrease can be attributed to fraudsters turning to more lucrative schemes such as account takeover.
- 78% of all e-commerce transactions came from mobile devices in 2019. That’s a 33% increase from 2018. E-commerce companies are scrambling to ensure a mobile-first experience for consumers not just to browse but to buy.
- 118% increase in risky transactions from mobile devices in 2019. Fraudsters have taken note that more e-commerce transactions are coming from mobile devices and cybercriminals are trying to replicate that consumer behavior in order to avoid detection.
“Although the death of brick and mortar has been well documented, there is still plenty of room for e-commerce growth with one report claiming online retail only makes up 14% of all global retail sales,” said Gaddis. “With so much room left for growth, it’s important that retailers stay ahead of the emerging transaction and retail trends to provide a friction-right experience for consumers and a fraudster-proof barrier.”
What’s clear from TransUnion research is that the consumer shopping patterns for retail have changed forever and have shifted even further and faster due to the impact of the coronavirus pandemic.
You can register to download a free copy of TransUnion’s Global E-commerce in 2020 report here.
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