7 Industries Hit Hardest by Ecommerce Fraud During the Covid-19 Era

A Health Crisis – and an Economic One

COVID has triggered both a health crisis and an economic crisis simultaneously. Millions of businesses have been shut down, and even more are treading water. For those that have been lucky enough to survive, adapting to new buying trends has been a job in itself. But on top of this, the rapid shift to ecommerce has created a rising tide of ecommerce fraud.

As merchants scramble to adapt and meet changing consumer needs such as the ability to shop for necessities from home, or the ability to have meals delivered, scammers are operating differently too. Studies show fraudsters are flocking to industries that are receiving higher traffic volumes to maintain anonymity and slip through the cracks. Unfortunately, this makes ecommerce companies a primary target for some of the most common online scam tactics.

1. Preventing Ecommerce Fraud in Travel

Data shows the travel industry has been hit harder than any other. Legitimate travel transactions all but disappeared at the height of quarantine. Thus travel companies saw an increase in fraud attempts and a drastic reduction in true customers. The travel industry has been one of several targets for card testing, a practice in which scammers test stolen cards to see if they can continue using them elsewhere.

2. Preventing Ecommerce Fraud in Retail

Many brick and mortar businesses have hastily made their way into ecommerce, which has set them up for both success and danger. While physical retailers have been able to survive by going digital, they’ve also become vulnerable to scammers who know they are ecommerce rookies. In the second quarter of 2020, humans rather than AI bots directed 1 out of every 5 ecommerce attacks.

For business owners in this unique position, National Merchants Association offers chargeback prevention education and high risk credit card processing at low fees. NMA is a merchant account that works for you, partnering with Fraud Wrangler, an AI-driven platform that alerts merchants of potential ecommerce fraud while collecting and analyzing critical transaction data.

3. Preventing Ecommerce Fraud in Online Gaming

When much of the global workforce received indefinite stay-at-home orders, it opened the floodgates for gaming fraud. Gamers using hacks to win tournament money is one insidious way scams have crept into the gaming industry. In-game fraud also rose as hackers discovered ways to employ bots to carry out repetitive tasks to earn money and prizes. A study by Arkose Labs revealed in-game fraud rose 60% from the first to second quarter of 2020. Findings revealed an average of 65 attacks per second occurring in the gaming industry.

4. Preventing Online Fraud in HR/Recruiting

Human resources is probably not the first industry most think of when it comes to ecommerce fraud. But HR and recruiting have been fruitful avenues for dishonest employees in 2020. From faking COVID to stretching the truth to receive financial aid or time off, some employees took advantage of the unusual circumstances. Unfortunately, already-suffering businesses took the financial hit. One factory shut down and sacrificed $175,000 in productivity losses from a false COVID report.

While HR fraud typically involves employees, recruitment fraud is the other side of the coin: Scammers post fake job descriptions hoping to score personal information from applicants. By playing the role of business owner, scammers can obtain social security numbers and other critical details for identity theft.

5. Preventing Ecommerce Fraud in Finance

The finance industry started off strong in 2020, with fraud incidents remaining low until the second quarter. Attacks were primarily human rather than bot-driven, and typically involved application fraud. Scammers attempted – and in some cases succeeded – in opening financial accounts with someone else’s personal information.

In one instance, a man was caught engaging in a loan fraud scheme, applying for COVID-related benefits that didn’t apply to him. Like many finance scammers, the man used unique sets of information to apply for both PPP and EIDL loans, resulting in a $196,900 payout.

6. Preventing Ecommerce Fraud on Media/Streaming Platforms

As with online gaming fraudsters, media fraudsters took advantage of quarantine free time to steal streaming services and create fake accounts. One example of this is music streaming apps, which have attracted fake musicians. Once signed up, individuals can manipulate play counts to earn money from the streaming platform.

Unsurprisingly, streaming platforms received significantly more mobile traffic during the second quarter of 2020. More mobile attacks have been reported in the media and streaming industry than any other, making it especially useful for these companies to invest in mobile security.

7. Preventing Ecommerce Fraud on Technology Platforms

Much like streaming platforms, tech platforms faced noteworthy human-driven fraud trends that rose 57% into quarter 2 of 2020. Tech-focused mobile attacks rose 27%. Scams abound on social media sites like Facebook and dating apps like Tinder. Because the technology industry encompasses so many types of businesses, fraud attempts are just as varied.

Fortunately, the tech industry is perhaps the most equipped to understand and handle ecommerce fraud with cutting-edge solutions. Tech professionals encounter everything from phishing attempts to identity theft and false payments, making fraud prevention technology a no-brainer investment.

Preparing for a New Era of Fraud

COVID has brought changes to nearly every facet of life for both businesses and consumers alike. But even as global health returns to normal, the multitude of fraud techniques being used online won’t disappear. All modern organizations will need a comprehensive fraud prevention plan that incorporates best practices and up-to-date technology.

At NMA, We Work For You® to establish the safest online business that meets the needs of your unique customers. Our payments experts work one-on-one to provide personalized merchant services that fit your business model. With some of the best rates in the industry, we look forward to helping you run a secure remote business. Learn more about the benefits of NMA membership and Payments Made Personal.

Leave a Reply

Your email address will not be published. Required fields are marked *