Despite the hype generated pre-U.S. Thanksgiving, Americans are expected to spend upwards of $7 billion online between the Thursday holiday and Cyber Monday just five days later.
But it is also estimated that U.S. e-commerce merchants will lose at least $63 million over the next five days due to online fraud.
The holiday shopping season is the busiest time of the year for fraudsters too, according to Ireland-based tech start-up Trustev. Card scams, return scams, and fake identities contribute to hundreds of millions in losses for retailers. The sheer volume of transactions occurring online during the holiday period means that while awareness is heightened, many retailers, banks, and credit card companies are forced to relax their security and fraud protection in order to cope with the onslaught of card payments.
The CyberSource Online Fraud Report found up to .9 per cent of all these transactions will turn out to be fraudulent. At busy, chaotic periods like the holiday season, retailers will miss much of the fraudulent activity, which will only become apparent after year-end when customers start receiving their credit card statements. With up to 90 days to report any suspicious card activity, the effects of holiday fraud can have a massive impact on a retailer’s balance sheet for several months.
Trustev believes that merely validating a credit card’s authenticity is not a high enough barrier for many fraudsters. Trustev calls itself an anti-fraud technology provider and focuses on identifying the individual attempting to make a purchase before any card details are even submitted. The company claims that its solution verifies the shopper’s identity prior to the payment process, guaranteeing the trustworthiness of the shopper. Its technology works in the background of the transaction, verifying multiple dynamic data sources to confirm the customer’s identity without slowing down the checkout process.
Also Trustev added that manual review of card-not-present (CNP) transactions can be prohibitively expensive for e-commerce merchants. Trustev’s solution aims to bring online fraud rates down to the equivalent of offline and other channels, allowing retailers to accept international payments from countries previously deemed too high-risk.
Trustev recently launched a trial of its offline, in-store anti-fraud solution with several global retailers. The company closed a $3 million seed funding round in October, with investors including Greycroft Partners, Mangrove Capital Partners, ACT Venture Capital, Telefonica’s Wayra, and Enterprise Ireland.
The $7 billion shopping forecast was provided by Adobe Digital Index.