A recent study identified online shopping, banking, and airline ticketing is the three hot areas for online fraud.
The study also claimed that eRetail (online shopping) would be particularly susceptible to online fraud, with the value of fraud in this sector increasing at twice that of banking and seven times that of airline ticketing. That is not good news, so let’s see a bit in details the study.
Shocking Fact Online Fraud Will Double In 2020
The new study from Juniper Research has found that the value of online fraudulent transactions is expected to reach $25.6 billion by 2020, up from $10.7 billion last year. This means that by the end of the decade, $4 in every $1,000 of online payments will be fraudulent.
The study found that the implementation of CHIP and PIN services at POS (Point of Sale) locations in the US is likely to be a key factor driving activity in the online fraud space. It argued that the greater security afforded by CHIP and PIN would persuade fraudsters to switch their attention from the in-store environment to the CNP (Card Not Present) space.
eRetail Tops the List for Online Fraud
The new study identified 3 hot areas for online fraud:
- eRetail (65% of fraud by value in 2020 – $16.6 billion)
- Banking (27% – $6.9 billion)
- Airline ticketing (6% – $1.5 billion)
The research highlighted two key areas for fraud within eRetail:
- ‘buy-online, pay in-store’ and,
- Electronic gift cards
It argued that the continuing migration to online and mobile shopping, of both digital and physical goods (reaching over $1.7 trillion in 2015) will provide a further incentive for fraudsters to focus their attention on these channels.
Countermeasures “Provide only Temporary Respite”
Meanwhile, the research claimed that although banks are able to counter online banking fraud by deploying new technologies such as 3D-Secure and device fingerprinting , these measures often only provide temporary respite as fraudsters quickly find new ways to defraud.
Similarly, while extensive efforts by the airline industry to deploy sophisticated Fraud Detection and Prevention (FDP) systems has reduced fraud significantly for some major airlines, this industry has also seen fraudsters shift their focus to other perceived weak spots in the system.
“A few larger airlines claim that they have reduced eTicket sales fraud to less than 0.1% or 10 basis points of revenues” said research author Gareth Owen. “When thwarted, however, fraudsters quickly move on to easier pickings such as frequent flyer fraud, for example.”
Juniper Research is acknowledged as the leading analyst house in the digital commerce and Fintech sector, delivering pioneering research into payments, banking and financial services for more than a decade.
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