Forter Fraud Attack Index Provides Merchants with Key Fraud Insights for the Holiday Season; Analyzes Impact of Boom in New Customers and Rising Rates of Omnichannel Fraud

Merchants experience 5x rise in new customer account transactions but could miss out on the full revenue potential due to false declines; Buy Online, Pick-up In Store fraud jumps by 55%

NEW YORK--()--Forter, the leader in e-commerce fraud prevention, today announced the release of its ninth Fraud Attack Index, delivering in-depth insight into the impact of COVID-19 on online buyer behavior and e-commerce fraud trends.

This edition of the Forter Fraud Attack Index encapsulates the most extensive research ever conducted in this field, revealing that:

  • New customer accounts now represent 30% of transactions, five times more than they did pre-COVID-19. This is good news for retailers, but merchants using legacy fraud prevention systems could miss out on some of this revenue potential due to high false decline rates. Legacy systems lack data on new customers and cannot accurately distinguish between legitimate consumers and fraudsters.
  • The growth in transactions driven by the consumer shift from brick-and-mortar stores to online purchasing is masking the fact that the number of fraud attacks has risen in real terms, leading retailers into a false sense of security.
  • Omnichannel fraud is growing: Buy Online, Pick-up In Store (BOPIS) fraud rose 55% as new customer service options are subjected to significant fraud.
  • With transactions falling by 97% compared with H1 2019, fraud attack rates in the travel industry more than doubled, with hotel fraud attacks rising 139% and airline fraud attacks increasing 144%.
  • Account Takeover (ATO) and Policy Abuse such as returns abuse, promotion abuse, and reseller abuse are set to surge during the holiday season.

Michael Reitblat, CEO and Co-Founder of Forter, comments: “A rapid rise in new customer accounts, coupled with having to pivot quickly from brick-and-mortar to online sales channels, put unprecedented stress on merchants as they tried to perfect the e-commerce experience. It is clear from what we’ve seen that some retailers were more agile and prepared for this than others, quickly introducing new services such as curbside pickup and Buy Online, Pick-up In-Store, in a bid to retain new customers.

“To fully realize this new revenue potential, merchants need more accurate fraud prevention that can distinguish between these valuable new customers and fraudsters. Merchants can have a false decline rate between 5-7x higher for new customers – typical of legacy systems that do not have sufficient data on new account holders.”

Growth in transaction volumes masks increasing fraud attack numbers

Forter Fraud Attack Index data tracked dramatic increases in transaction volumes across the majority of vertical sectors, but particularly those traditionally served by brick-and-mortar stores. Volumes rose 172% in Home, Furnishings and Garden, 93% in Food Delivery & Beverage and 119% in Groceries. E-commerce fraud attacks decreased as a percentage of all transactions but in real terms, the number of fraud attacks has risen. This represents significant losses for retailers at a critical time.

Holiday season fraud surge expected as account takeover, omnichannel fraud and policy abuse is set to spike

As retailers prepare for a critical holiday season and aim to recoup some of the year’s earlier losses, Forter’s research indicates that ATO attacks, and returns and delivery fraud will surge as fraudsters seek to exploit the increase in online shopping. At the same time, customers will be more likely to take unfair advantage of promotions and abuse delivery and returns policies. Fraud and abuse trends that retailers need to prepare for include:

  • Account Takeover fraud to dramatically Increase: Forter’s analysis indicates that fraudsters will seek to operationalize the data they’ve stolen and collected through data breaches and social engineering scams conducted during COVID-19 disruption. Also, new customer accounts opened by less experienced users are likely to use weaker passwords, fewer security steps, and be more vulnerable to ATO. As a result, retailers need to prepare for increasing ATO attacks during the holiday season.
  • Returns and Delivery Fraud will continue to rise: Retailers increasingly offered flexible omnichannel customer service options such as Buy Online, Return in Store (BORIS) and BOPIS, to satisfy new customers during COVID-19. Fraud attacks exploiting BOPIS policies increased 55% compared to H1 2019, as merchants offering frictionless experiences are less likely to ask for customer identification. Forter anticipates fraudsters will increasingly target and exploit returns and delivery services as online shopping surges over the holiday season.
  • Policy Abuse Set to Spike: Merchants courting new customers with aggressive promotions and user-friendly omnichannel options, will expose themselves to greater abuse risk, including returns, promotion and reseller abuse.

Vikrant Gandhi, Senior Industry Director at Frost & Sullivan commented: “Fraud and policy abuse issues have magnified in the recent months in the global e-commerce industry. Our research indicates a rise in sophisticated fraud attempts, including promotions abuse by using synthetic identities and friendly fraud in 2020. The challenge for merchants is to deliver frictionless customer experiences without letting fraud prevention come in their way of doing so. Our recommendation to merchants is if they do not prioritize working with identity-based, integrated fraud prevention platforms that leverage behavioral analytics, machine learning and the power of big data that is informed and refined by highly trained analysts, they will never be able to stay ahead of fraudsters and policy abusers.”

Access the full Forter Fraud Attack Index here.

About Forter

Forter is the leader in e-commerce fraud prevention, processing over $200 billion in online commerce transactions and protecting over 800 million consumers globally from credit card fraud, account takeover, identity theft, and more. The company’s identity-based fraud prevention solution detects fraudulent activity in real-time, throughout all online consumer experiences.

Forter’s integrated fraud prevention platform is powered by its rapidly growing Global Merchant Network, underpinned by predictive fraud research and modelling, and the ability for customers to tailor the platform for their specific needs. As a result, Forter is trusted by Fortune 500 companies to deliver exceptional accuracy, a smoother user experience, and elevated sales at a much lower cost. Forter was recently named the Leader in e-Commerce Fraud Prevention by Frost & Sullivan.

Forter is backed by $100M of capital from top-tier VCs including Sequoia, Scale, and Salesforce.


Jim Pople
C8 Consulting for Forter
P: +44 1189 497736


Jim Pople
C8 Consulting for Forter
P: +44 1189 497736