Looking forward to Christmas? Spare a thought for the nation’s retailers, who will be battling as many as one million fraud attempts each day in the period following Black Friday, according to new estimates.
They come from ThreatMetrix, a fraud prevention company with good industry insight thanks to its Digital Identity Network platform which analyses over 20 billion transactions globally each year.
It predicted a 60% increase in fraudulent e-commerce transactions in Q4 2016 compared to the last three months of 2015.
Product and data evangelist, Rebekah Moody, told me that this time of year usually sees an uptick in activity as dodgy transactions are less likely to be spotted, because retailers loosen fraud filters to let more transactions through.
“Transaction volumes are much higher – we saw huge daily peaks for some merchants in the same period last year. This means some merchants may choose to adjust their risk tolerance to ensure that more transactions can be processed with less friction,” she explained.
Cybercriminals also jump on the fact that average basket values are usually higher in the run up to Christmas.
“Fraudsters capitalise on this by trying to sneak through higher value transactions that are less likely to flag as unusual in amongst the sea of high value transactions,” said Moody. “Last year we saw the average basket value of rejected transactions was around 70% more than the overall average. We expect this trend to be mimicked this holiday season.”
The problem is compounded by current fraud prevention technologies, many of which have problems detecting some of the more advanced techniques used by the black hats, including device and IP spoofing and automated bots.
The latter threat is increasingly prominent to the point where, during attack spikes, bot traffic exceeds legitimate user traffic, according to the company’s latest Cybercrime Report for Q3.
It has the following:
“What might begin as a simple account validation using a basic bot evolves to using a complex bot to guess unknown passwords, to a bot that masquerades as genuine human traffic to trick unsuspecting businesses.”
Another tactic which makes fraud hard to spot is when the scammer manages to trick a victim into downloading malware onto their machine.
“For example, a fraudster convinces a customer to download some remote access software after playing to their worst fears that their account is being hacked following a data breach. They pretend to be from the consumer’s bank, and reassure them that they will protect their account from the impending hack,” explained Moody.
“In actual fact they manage to take over the consumers account after the consumer has legitimately logged in.”
Because there are no unusual log-in patterns, strange locations or hacked devices to monitor, it might look like a legitimate transaction.
“The key here though is that the remote access software was suddenly enabled, and then the fraud occurred,” Moody told me. “It’s not the fact that there was remote access software installed; many consumers use this legitimately. It was the change in behaviour. Unless a fraud system is advanced enough to detect this, it could be easy to see how this technique could cause huge issues.”
The best systems work in the background, using contextual data and real-time behavioural analytics in a way that is invisible to the user. But unfortunately they’re still not the norm. According to Barclays, two thirds of retailers (64%) are confident that their digital infrastructure will cope well with the Christmas rush. But if they prioritise up-time and sales over fraud prevention, there could be some nasty surprises down the line.