Shoppers and businesses are being warned to expect a surge in fraudulent activity ahead of Black Friday and the Christmas shopping period. Christmas shopping will be ramping up over the coming weeks as the big day quickly approaches. As technology advances and criminals get more creative with fraud practices, new waves of scams are cropping up that can compromise the good cheer of the season. You can safeguard yourself from these potential nightmares by recognizing the warning signs of fraudulent activity.
With the effects of COVID-19 on shopping habits, 2021 is being a milestone for the e commerce industry. According to Iyzico’s research in Turkey, in Black Friday 2021 the numbers of the transactions went up by 22%. Also, the transaction volume went up by 38%. Black Friday is over, but the holiday shopping season continues. Fraudsters are still on the watch for increased transaction volume all around the world. Until the holiday season is over the fraudulent activities will continue at a fast pace. This record-breaking year of digital habits, will witness even more in December. Authorities from banks and financial institutions are warning businesses and shoppers about an expected fraud surge ahead of holiday shopping season.
Why Holiday Season Is So Popular with the Fraudsters?
In 2020, retail e-commerce holiday season sales in the United States amounted to almost 186 billion U.S. dollars. Forecasts suggest that online sales for the holiday period would grow by more than 14 percent in the U.S. in 2021, reaching close to 207 billion dollars.
With this jaw-dropping statistics, it is obvious that it is a golden opportunity for fraudsters to act on holiday season. Internet traffic around holiday shopping season grows exponentially and personal data is everywhere. There are many ways to make use of this opportunity for fraudsters.
UK’s National Fraud & Cyber Crime Reporting Centre, Action Fraud, lets businesses and consumers know that £15.4 million was lost to fraud over Christmas last year in United Kingdom only. It’s clear how big is the danger for businesses along with everyone on the internet.
Upcoming Fraud Surge
Every year especially around the holiday season, businesses and shoppers become targets for the fraudsters. However, this year is a high-risk year compared to last years. According to experts from UK, a huge fraud surge is coming in December 2021. The numbers that have been raising rapidly since the beginning of the COVID-19, will likely to peak this month.
According to Independent UK’s news, Eduardo Castro, the head of identity and fraud at Experian, stated that “The UK is experiencing a severe wave of fraud which shows no signs of abating, and it is highly likely, as many of us head online to do Christmas shopping, that the trend will be even more pronounced over the next month. The risk is to both businesses and consumers.” This situation is the same for almost all countries, so it’s a global alert for everyone!
What Should You Expect from Fraudsters This Christmas Shopping Season?
The statement of Experian also stresses that credit card application fraud is likely to be the number one danger in the fraud surge. Of course, there are many other popular methods with scammers. Here’s a list of what to expect from fraudsters this shopping season:
- Credit Card Application Fraud:
Every day, fraudsters steal hundreds of thousands of dollars' worth personal data. They make us of this valuable acquiree in various ways. One of the most popular methods is application fraud. Application fraud is applying for a loan or credit card with stolen identification. This is a sensitive issue for banks especially since the fraudster has no intent to pay the debt. Popular shopping seasons are a good opportunity to acquire personal information. Hence, banks should be very careful around this time.
- Identity Theft Fraud:
Identity theft is actually the first step of various fraud tactics including application frauds. If a database’s cyber security measurements are not strong enough, scammers can reach the information. Identity fraud is the situation where stolen identities are used to commit a crime. It’s your responsibility to preserve your customers’ personal data securely. Also, fraudsters may use currently stolen identities to scam your business with payment frauds.
- Account Takeovers:
Account takeovers are a thread to most financial institutions, especially to ecommerce and banking industries. Similar to identity theft, this tactic is related to stolen personal information as well. In this method, fraudsters acquire an account’s credentials. They might use this fraud, for example, to open fake bank accounts and taking over ecommerce accounts. They can trick your customers through your business account. Then they may steal your profits as well as acquiring your customers’ personal information.
- Friendly Fraud:
This is the situation where your real customer is actually the fraudster. Yes, it sounds a little confusing. Let’s take a look at it: A customer makes a purchase from a merchant. Then they inform the bank that the transaction is unauthorized so that they can get chargebacks from the bank and keep the product as well. This clever method is getting very popular with fraudsters.
- Phishing Scams:
Phishing is a way of acquiring personal data and various information. Fraudsters may send text messages or emails to scam you to share information. Since it can lead to many different fraudulent activities both the businesses and customers should be very careful about this.
How to Protect Your Business from the Fraud Surge?
This is a list of potential dangers to your business and profits. By watching out for these methods in December holiday shopping season, you can protect your business from fraudsters. If you want to know how you can prevent fraud and get ready for scam attacks, you can check our piece “How to Deal with Fraud on Black Friday in 2021?” by clicking. In this blog piece, we mentioned the most useful measurements that you can take to protect your business.