The holiday shopping season isn’t all wish lists, massive sales and beautifully wrapped gifts.
Unfortunately, along with millions of transactions comes a high incidence of fraud — and the nature of that fraud is changing this year due to the shift over the last year or so to EMV, or chip, cards.
A survey of 125 retailers representing 13% of online sales projects that online fraud attempts will rise 43% this year over last.
Traditionally, “if you had your credit cards scanned or stolen — your credit card number, name, expiration, and CVV — someone could theoretically, and they do, have the tools to reprint your plastic card and go into a store swipe that card and purchase goods,” says Erika Dietrich, global director of payments risk at ACI Worldwide, which handles electronic payments for more than 5,000 organizations and conducted the survey. However, it’s difficult for them to reproduce chips. “While they do have the capabilities,it’s costly and sophisticated and not as easy as reprinting those fraudulent cards,” says Dietrich.
However, that has shifted such activity online, where chips have no security benefit.
“We’re seeing an uptick in fraud attempts, particularly when you’re buying online and picking up in store,” as opposed to selecting three-day shipping, says Dietrich.
“Buy online, ship to the store, first-class, next day shipment — those classes and methods of shipment enable a fraudster to almost immediately buy their product and receive it within minutes to hours,” she says. “That also presents challenges to merchants because their window of opportunity or their ability to scrutinize transactions when they have to ship it so quickly is minimized.”
For the same reason, the study projects that Christmas Eve will be the peak day for fraud attempts, accounting for 2.5% of all fraud for the year. (Cyber Monday is expected to see the highest transaction volume of the year, with Black Friday just behind.)
Hot items include activity trackers and gadgets like Apple Watches, Fitbits, as well as cordless headphones and earbuds. Cosmetics, facial creams and Jordan sneakers have also caught fraudsters’ eye, as have — of all things — Dyson vacuums. (Dietrich notes that they are especially good at cleaning up pet hair but pricy.) As would be expected, fraudsters are going after items that would be popular on the black market or auction sites.
The average fraudulent transaction is projected to be $219, an 8% decrease from last year’s $239, partly due to alternative shipping methods such as pick-up-in-store. While the shift toward online fraud is significant, overall, North America’s fraud rate is the lowest globally, with the fraud rate at 4.3% in Africa, 3.6% in Europe and Asia, and 2.3 in South America. Comparatively, North America’s rate is 1.6%.
How To Protect Yourself
1. Monitor your accounts.
In order to keep your card safe, follow your transactions daily or at least every few days, whether through one of the financial tracking apps such as Mint, Personal Capital or You Need a Budget, or by checking your credit card and bank transactions directly. Dietrich also suggests setting up alerts with your card issuer to notify you of purchases above a certain dollar threshold, such as $100.
2. Only buy from reputable sites.
“Be wary of deals that look too great,” says Dietrich. If you’re on an unknown site and the price is well below market, remember the adage about things that look too good to be true.
3. Search for SSL or 3D Secure.
Sites that use SSL establish a link between your browser and their servers that protect your data. They often tout this on the site.
Merchants, banks and card issuers can agree to employ 3D Secure, used in the products Verified by Visa, MasterCard SecureCode and Amex SafeKey.
4. Don’t give your financial information out via email or phone.
If you receive a call for, say, a free vacation offer as long as you give them your credit card number, don’t do it, no matter how enticing that offer of beach time sounds. Emails can easily be forwarded, making your financial information vulnerable. (If you need to relay it to someone remote, you can use the phone as long as you can verify the identity of the party on the other end of the line.)
While it’s good to be aware of the risks, Dietrich says, “Enjoy the online shopping period, it’s a comfortable way to shop, and while there is fraud, it’s not a big percentage.”