A new eBook from Sift, Digital Trust & Safety Index: Exposing the Multi-billion Dollar Fraud Economy illustrates through new data from Sift’s global merchant network a complex, interconnected Fraud Economy of known vectors and emerging threats, with the majority of attacks serving as stepping stones towards high-return payment fraud—and the potential to cost online businesses resources, profits, and growth at every touchpoint.
The pandemic played an influential role in how payment fraud changed and scaled in 2020. Incidentally, the relentless disruption felt across e-commerce also exposed the depth of the Fraud Economy, and the danger it poses for businesses. It’s more than a blanket term for online crime; it’s a sophisticated network of active cybercriminals with access to everything they need to exploit online businesses—and it operates on the same basic principles as the industries it impacts.
As a result, fraudsters are as knowledgeable about the mechanics of digital commerce as the legitimate merchants they target. They can accurately identify security vulnerabilities, and know how to use a merchant’s success against them. As internet traffic surged last year by between 50%-70%, the amount of money spent by online shoppers nearly doubled. Fraudsters seized on climbing transaction volumes and unanticipated consumer behaviors like stockpiling, driving the average value of attempted fraudulent purchases up by 69% year-over-year.
Four types of businesses were hit particularly hard by the burgeoning Fraud Economy: lodging merchants, omnichannel retailers, digital wallets, and professional marketplace companies each saw fraud rates and fraudulent order values rise considerably between 2019 and 2020—a problem compounded by pandemic-era market fluctuations.
Sift’s Trust and Safety Architects credit these higher value attacks and ballooning fraud rates to the challenges e-commerce businesses faced under coronavirus restrictions: too many people cooped up at home, misinformation causing changes in consumer behavior, dormant user accounts, and fraudsters watching from the wings, ready to take advantage.
Other key points in this report include:
- The contributing factors to the 69% year on year surge in attempted online payment fraud
- How fraud vectors have evolved from siloed incidents into an interconnected Fraud Economy, with the majority of vectors leading to payment abuse
- Details of a sophisticated fraud ring attacking fundraising sites with automation
- The industries, items, and payment types most targeted by cybercriminals in 2020
To explore in full, you can download the eBook Digital Trust & Safety Index: Exposing the Multi-billion Dollar Fraud Economy here.