Online Transaction Fraud To Grow As Fraudsters Switch Focus
Online transaction fraud will more than double by 2020, according to Juniper Research, with fraudsters increasingly switching their attention from in-store to online.
Juniper expects that the value of online fraudulent transactions will reach US$25.6 billion by 2020, up from US$10.7 billion last year, meaning that US$4 in every US$1,000 of online payments will be fraudulent.
According to the Juniper study, the implementation of chip and PIN services at point-of-sale locations in the US will likely “be a key factor driving activity in the online fraud space”, with the greater security afforded by chip and PIN to “persuade fraudsters to switch their attention from the in-store environment to the CNP (card-not-present) space”.
Three online fraud “hot areas” are: eRetail (65 per cent of fraud by value in 2020 – US$16.6 billion), banking (27 per cent – US$6.9 billion) and airline ticketing (6 per cent – US$1.5 billion).
Juniper has highlighted two eRetail key areas for fraud: “buy online, pay in-store” and electronic gift cards.
Meanwhile, Juniper notes, as consumers continue to migrate to online and mobile shopping for both digital and physical goods (reaching over US$1.7 trillion this year), this will provide further incentive for fraudsters to focus their attention on these channels.
While banks are able to counter online banking fraud via the deployment of new technologies such as 3D Secure and device fingerprinting, the research has found that “these measures often only provide temporary respite as fraudsters quickly find new ways to defraud”.
Juniper also notes that “extensive efforts by the airline industry to deploy sophisticated fraud detection and prevention (FDP) systems has reduced fraud significantly for some major airlines”, however fraudsters have shifted focus “to other perceived weak spots in the system”.
“A few larger airlines claim that they have reduced eTicket sales fraud to less than 0.1 per cent or 10 basis points of revenues,” research author Gareth Owen commented. “When thwarted, however, fraudsters quickly move on to easier pickings such as frequent flyer fraud, for example.”