Fraud prevention specialist Forter has revealed travel cyber attacks in travel have skyrocketed during the COVID-19 pandemic.
The firm has released its ninth Fraud Attack Index, an in-depth insight into the impact of the pandemic on online buyer behaviour and e-commerce fraud.
The study finds a 30% increase in new account e-commerce transactions which now account for five times more than pre-COVID but warns legacy anti-fraud systems might generate high levels of false decline.
However, in travel, although transactions were down 97% in the first six months of 2020, fraud attack rates in more than doubled, with hotel fraud attacks rising 139% and airline fraud attacks increasing 144%.
The report says Account Takeover (ATO) and policy abuse such as returns abuse, promotion abuse, and reseller abuse are set to surge during the holiday season.
Michael Reitblat, chief executive and co-founder of Forter, said: “A rapid rise in new customer accounts, coupled with having to pivot quickly from brick-and-mortar to online sales channels, put unprecedented stress on merchants as they tried to perfect the e-commerce experience.
“It is clear from what we’ve seen that some retailers were more agile and prepared for this than others, quickly introducing new services such as curbside pickup and buy online, pick-up in-store, in a bid to retain new customers.
“To fully realize this new revenue potential, merchants need more accurate fraud prevention that can distinguish between these valuable new customers and fraudsters. Merchants can have a false decline rate between 5-7x higher for new customers – typical of legacy systems that do not have sufficient data on new account holders.”
As retailers prepare for a the festive season and aim to recoup some of the year’s earlier losses, Forter’s research indicates that ATO attacks, and returns and delivery fraud will surge as fraudsters seek to exploit the increase in online shopping.
At the same time, customers will be more likely to take unfair advantage of promotions and abuse delivery and returns policies. Fraud and abuse trends that retailers need to prepare for include:
Vikrant Gandhi, senior industry director at Frost and Sullivan, said: “Fraud and policy abuse issues have magnified in the recent months in the global e-commerce industry.
“Our research indicates a rise in sophisticated fraud attempts, including promotions abuse by using synthetic identities and friendly fraud in 2020.
“The challenge for merchants is to deliver frictionless customer experiences without letting fraud prevention come in their way of doing so.
“Our recommendation to merchants is if they do not prioritise working with identity-based, integrated fraud prevention platforms that leverage behavioural analytics, machine learning and the power of big data that is informed and refined by highly trained analysts, they will never be able to stay ahead of fraudsters and policy abusers.”