Online Fraud Forum 2016: Retail fraud survey results

Online Fraud Forum 2016: Retail fraud survey results

Online Fraud Forum 2016: Retail fraud survey results

At the Online Fraud Forum 2015, we asked all attendees from the ecommerce sector to participate in a short survey on the modern fraud threat. In our September 2016 event, we conducted this survey again, providing another fascinating insight into the latest challenges of fraud prevention and the approaches companies are taking towards solutions. Here are the results.

Companies of different sizes took part in the survey, where more than 40% of the respondents had an annual turnover of under €100 million, while 16% of the participants had an annual turnover of over €1 billion Euros. Sector-wise, the highest participation rate came from conglomerate merchants, fashion retailers, as well as telecommunication and financial providers.

Particularly interesting were the answers regarding the methods of payment and fraud types. More than 80% of participants said the most common payment method is via credit card, followed by paying with debit. Even though paying with invoice is a high-risk method for retailers, it still made it to third place in the most common used payment method from customers, while PayPal and other alternative payments are also among the popular payment methods.

The question about the three most common fraud types indicates that credit card fraud, identity theft and subsequent use of fake identities are among the biggest issues concerning merchants today. These were followed closely by credit rating fraud, as well as fake addresses and account takeover fraud.

When fighting fraud, 84% of respondents replied that they use an in-house self-built solution, although 55% cited external solutions as their primary software when fighting fraud, yet only 19% said that they use specialist service providers. Nonetheless, the companies have a rather short rhythm when it comes to adjusting their fraud prevention: 42% change it once a quarter, 26% once every six months and 22% only readjust it once every year.

This is dangerous, as fraudsters don’t sit still or update their tactics every quarter or year; they evolve their methods constantly, probing for weaknesses to exploit. Fraud prevention should be able to intelligently evolving to meet these changeable threats.

Looking ahead, the participating companies are expecting an increase in their spending on fraud prevention. Around 50% of respondents expect a light increase, while 27% expect a significant increase. Topics that will be of high importance in the near future are, among others: manual vs. automatic fraud prevention, and rule optimization and data processing, but also: control of payment methods and fighting identity theft, fake identities and account takeover.