July 26, 2019
Trends in Insurance | How Can We Prevent Fraud?
Across the board, insurers found they were experiencing a huge…
As the holidays approach, shoppers gear up to find the best deals to supplement their wish lists and fraudsters prepare to take advantage of these consumers. It is estimated that 70 percent of Americans, or 164 million people, will shop during Thanksgiving day, Black Friday, and Cyber Monday, aiming to find the best deals, both online and in-store. Sales from holiday shopping are expected to run, on average, $967.13 per shopper – 4 percent more than last year, totalling between $678.8 and $682 billion overall.
Retailers are not only concerned with how to lure shoppers into stores with the promise of saving money and great deals, they’re also focused on minimizing fraud loss. Fraudsters are on high alert as the holiday season rolls around, looking for easy targets created by the spike in retail shopping. The volume of spend that will occur this Thanksgiving weekend creates incentives for fraudsters to capitalize on the retailers vulnerabilities.
National Retail Federation found that 11% of returns are fraudulent. In addition, the rollout of EMV chip technology and tightened security online has pushed fraudsters to exploiting the phone channel, which has been left as the weakest link. In 2014, one in 1000 calls to a retail call center was found to be fraudulent. By 2016, this number jumped to one in 491 calls, the highest fraud rate of every other industry. Fraudsters know the physical and online channels are tougher to break through, making the phone channel the prime target for card not present (CNP) fraud and costly chargebacks.
Call center fraud is an active problem, and there has been an added 22% increase in fraud rates since 2016, creating a 160% increase from the previous year. If the call center is left unprotected, fraudsters will continue to perfect their techniques to capitalize on their gain.
For retailers, this trend will be difficult to reverse without a drastic change in call center security measures. Multi-factor solutions are what stand up to fraudster sophistication, helping deter fraud in call centers.
Read more about the increase in fraud in Merchant Risk Council’s Resource Center.
And don’t forget to meet with us in the new year at NRF’s Big Show in January!