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online retail fraud

iovation, the leading provider of device intelligence for authentication and fraud prevention, today released new data that shows card-not-present fraud—fraudulent transactions where a credit card is not physically presented to a merchant—increased significantly from Black Friday to Cyber Monday 2016 when compared to the same period in past years.

iovation research shows a 20 percent increase in online retail credit card fraud during the 2016 holiday shopping weekend when compared to the same period in 2015, and a 34 percent increase in online credit card fraud from Black Friday to Cyber Monday 2014 to 2016. In addition, iovation disclosed:

The percent of all online retail fraudulent transactions from Black Friday to Cyber Monday that involved credit card fraud

  • 2016: 59 percent
  • 2015: 49 percent
  • 2014: 44 percent

The percent of all online retail fraudulent transactions in 2014, 2015 and 2016 that involved credit card fraud

  • 2016: 59 percent
  • 2015: 42 percent
  • 2014: 50 percent

The percent of online retail transactions from Black Friday to Cyber Monday that were fraudulent

  • 2016: 0.38 percent
  • 2015: 1.16 percent
  • 2014: 2.34 percent

The percent of online retail transactions in 2014, 2015 and 2016 that were fraudulent

  • 2016: 1.13 percent
  • 2015: 2.89 percent
  • 2014: 2.53 percent

iovation attributes the rise in online credit card fraud to the recent shift from consumers using traditional credit and debit cards with magnetic strips to EMV (Europay, MasterCard, and Visa) chipped cards. While the new chip cards have proven to do a great job of stopping card-present fraud, it is now clear that fraudsters are turning online.

“The shift from in-person card fraud to card-not-present fraud shows that cybercriminals are quick to shift the focus of their scams," said iovation CTO Scott Waddell. “Much like EMV became a major weapon for in-person merchants, new authentication approaches will be the antidote to curb this new trend.”

Based on past research iovation conducted, the company recently predicted the rise in card-not-present fraud over the holiday shopping weekend.

Mobile Shopping Preferred Over Desktops and Laptops

iovation also found that consumers conducted 55 percent of their retail online transactions from this Black Friday to Cyber Monday using mobile phones and tablets compared to 49 percent the rest of 2016. This continues an ongoing mobile retail transaction increase over the holidays and year-to-year. Last year during that same period that percentage was 47 percent compared to 44 percent the rest of the year, in 2014 that was 37 percent compared to 32 percent the rest of the year and in 2013 that was 31 percent compared to 20 percent the rest of the year.

For the holiday shopping weekend, mobile retail transactions compared to all retail online transactions were:

  • 56 percent on Black Friday, Nov. 25
  • 59 percent on Saturday, Nov. 26
  • 59 percent on Sunday, Nov. 27
  • 48 percent on Cyber Monday, Nov. 28

“The mobile drop-off on Cyber Monday highlights the extent to which showrooming among consumers is increasingly popular,” said Julie Conroy, research director at Aite Group. “More and more consumers are combining m-commerce with their brick-and-mortar shopping trips in an effort to get the best price. On Cyber Monday, once consumers are back at work, buying patterns revert to the computer, whose larger size still provides a more user-friendly shopping experience.”

In addition, iovation found the top operating systems for retail online purchases from Black Friday to Cyber Monday were iOS (40 percent), followed by Windows (31 percent) and Android (15 percent).

Cyber Monday and Black Friday Share the Title of Cyber King

Despite the widespread talk of Cyber Monday being dead, iovation found that somewhat untrue. iovation research revealed that during the holiday weekend, 29 percent of all online retail transactions during that period were made on both Black Friday and Cyber Monday, Nov. 25 and 28. For the 2015 holiday shopping weekend, 29 percent of all online retail transactions were made on Black Friday and 31 percent on Cyber Monday, and in 2014 32 percent of all online retail transactions were made on Black Friday and 29 percent on Cyber Monday.

“We now have concrete evidence that the flattening popularity of Cyber Monday is somewhat true as evidenced by Black Friday online transactions growing 29 percent year-to-year compared to Cyber Monday growing 24 percent year-to-year,” said Waddell. “Although it’s too early to say exactly, I believe this shift away from Cyber Monday being the day for retailers is because so many consumers have become comfortable using their phones to make purchases.”

iovation came to these conclusions by analyzing the tens of millions of transactions that its authentication and fraud prevention solutions process every year from Black Friday to Cyber Monday, and the billions of transactions it analyzes for fraud indicators every year. The company authenticates the trustworthiness of transactions and devices for some of the world's biggest global brands through a combination of advanced device identification, shared device reputation including 30 million client-contributed fraud reports, and real-time risk evaluation. This creates unique insight into retail and financial industry transactions—two key sectors for holiday shopping.

For more insights about iovation’s holiday online retail findings, go to https://www.iovation.com/infographics/cyber-monday-2016

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