Stoked by the U.S. EMV shift, financial institutions and retailers can expect holiday card-not-present fraud rates to increase 43% by volume and 31% by value according to ACI Worldwide research.
Naples, Fla.-based ACI Worldwide’s Holiday Trends Report, found fraudsters more effectively deterred from in-store fraud, shifting focus online following the U.S. adoption of EMV chip cards, which protects present card data through encryption.
The new benchmark data also projects fraud and new business growth rising at the same rate globally, compared with the same period last year, and lower ticket prices on fraudster-targeted gifts and products.
In the U.S., Thanksgiving and purchases just prior to Christmas have the highest fraud attempt rates. The expected peak-fraud attempt day is Christmas Eve, with nearly 2.5% fraud, due to the popularity of gift cards and last-minute shopping via buy online/pick up in-store availability.
Cyber Monday projects to have the highest processing volumes of any day of the year, followed closely by Black Friday.
Principal findings include:
- CNP global online fraud attempt rates are expected to increase 12% by volume over the same peak holiday period in 2015, with sales to increase by nearly the same rate (13%) in 2016.
- The 2015 trend of lower ticket prices will continue in 2016 due to alternative shipping methods (for example, buy online/pick-up in-store), low-priced electronics and promotions.
- In the U.S., attempted fraud average ticket value, or a retailer’s average size of individual sales by credit card, projects to decline from $239 to $219, an 8% decrease.
- Fraudsters’ focus is on cosmetics, cordless headphones, sneakers and other lower-priced items (including ‘Gift with Purchase’ products) easily resold on the black market or via auction websites.
“Fraud is increasing at a rate nearly equal to general retail growth globally, and is exponentially increasing in the U.S., due to a seismic shift from in-store to online activity,” Mike Braatz, chief product officer, ACI Worldwide, said. “And because fraudulent activity is now considered to be an everyday occurrence, consumers and merchants must take every precaution as we head into peak holiday shopping season.”
“Merchants need to understand their peak days and the sales that drive those high velocity times to ensure risk strategies are effective and efficient,” Braatz continued. “It’s important to prioritize real-time fraud detection without alienating the consumer experience.”
