Forter, an eCommerce fraud prevention provider published its Forter Special Report on Impact of Coronavirus on Consumer and Fraudster Behaviour. The report provides merchants across industries with insight into trends seen within the $150 billion in transactions that Forter processes annually.
As the pandemic sweeps across the globe, government responses have included enforced social distancing and financial support to beleaguered economies. Merchants who sell non-essential goods have responded by closing physical stores, and in some regions also their online operations. Consumers have begun to shift their purchases, even those of essential items such as groceries, online.
Delivering a consistent customer experience
The Forter Special Report tracks trends and spikes in consumer behaviour. It also monitors the innovative methods that opportunistic fraudsters take to prey on consumers during this unprecedented and unpredictable time.
According to Michael Reitblat, Forter’s CEO, “Merchants are scrambling to cut costs, reduce the impact of fraud and scale efficiently. We have to deliver a consistent customer experience to meet rising consumer online buying behaviour. The aftermath of the pandemic will accelerate digital transformation among merchants as consumer shopping habits adapt.”
The Forter Special Reports covers a variety of industries including travel, fashion and beauty, food and beverage, marketplaces and more. The report highlights consumer trends including:
- The travel industry has been extremely hard hit. Regional variations are beginning to become apparent. For instance, an increase in purchases of inbound international travel to China in the weeks before the country closed down. Data in the last month points to “optimistic travel” in which travel date is 120 or more days following booking. Such bookings now account for 65% of travel purchases.
- The food and beverage industry has seen a dramatic increase in online purchases. New accounts now represent 15-25% of all customer volume, compared to 5-7% prior to the pandemic. As merchants struggle to manage the increased volume and meet the expectations of new customers. The research shows an increase in service chargebacks.
Increased fraud activity
The report says fraudsters are also exploiting confusion and uncertainty caused by government and corporate policies:
- As people adjust to working from home, Forter sees a marked increase in social engineering fraud. These types of frauds are associated with fake emails purporting to be from HR and corporate addresses. Here fraudsters invite people to click for more information, instead they take victims to malicious sites.
- With a shift to online shopping in Apparel and Accessories, Forter sees an increase in gift card purchases. While a higher number of legitimate buyers usually means that fraud rates drop, gift card fraud rates have not. Fraudsters have noticed an increased demand of the completely virtual merchandise that is easy to monetise.
In its recent report, “Mitigate Coronavirus (COVID-19) Business Impacts With Digital Commerce (March 2020),” Gartner asserts that “the COVID-19 outbreak will negatively impact business performance in the short term as offline activities are cancelled and online orders overwhelm delivery capacities. Application leaders can mitigate the impact and ensure continuity of operations by accelerating digital commerce initiatives.”
“With more consumers buying online, we expect merchants who hadn’t considered eCommerce are now trying it,” continued Reitblat. “Merchants that had already adopted eCommerce struggle to meet this increase in demand. Working collaboratively from home and hiring to meet the volume create obstacles for those who manually review transactions for fraud.”
Together with the Special Report, Forter has also issued its Eighth Fraud Attack Index. The index highlights industry trends and innovative fraud vectors, showing the evolution of fraud. As commerce evolves, so too do fraudsters’ methods of attack and exploitation. Analysts have suggested fraud attacks and abuse methods have become more sophisticated. This comes at a time when user experience is key to overall business success. There can be a tension between a merchant’s need to manage risk and customers’ expectation of seamless user journeys. To ensure brand survival in an increasingly competitive market, retailers must deliver friction-free customer experiences while also protecting their business.
Enterprise times: What this means for business?
Last year, overall fraud attacks increased by 19% across a global scale. Security analysts expect this trend to intensify as retailers address the impact of a global pandemic. This is an interesting report which should support any enterprise face the shifting eCommerce landscape. This is particularly the case as both consumer behaviour and online frauds evolve in the current environment. The report features the continued evolution of fraud attack vectors across all customer touchpoints. It demonstrates the need to protect merchants’ digital offerings at all interactions in the customer journey. This ranges from account abuse to payment abuse to policy abuse.