As businesses try to navigate through an ever-changing digital landscape, fraudsters are taking advantage of weaknesses introduced by digitalization. While online sales in the UK rose by 3.6% in 2017, there is still an ongoing need for online retailers to enhance their customer experience and in turn sustain rapid growth.
As a result, online retailers have made it extremely easy for customers to receive refunds for unwanted products. Which is one of many steps in providing their customers with an enhanced customer journey. In addition, companies are reluctant to implement any process that will deter customers from completing a purchase. Even standard controls such as CAPTCHA are not implemented at the cost of jeopardizing conversion rates. As such, cyber-criminals are taking advantage of this situation in order to monetize loopholes to profit.
CyberInt has noticed this trend and conducted research to understand the magnitude of this issue. In our research, we uncovered that fraudulent refunds rank among the most significant threats to revenue loss.
Let’s delve into what we uncovered in our analysis and see how you can leverage our findings in order to protect your organization, amidst this evolving and threatening environment. Below are our 5 key takeaways from our findings.
5 Key Takeaways:
1. Online retail businesses are accruing significant losses:
Online retail businesses lost approximately 500,000 GBP per month, due to fraudulent refunds. This is only one aspect of cyber-criminals’ activities targeting the retail industry. The potential loss when you take into consideration fraudulent vouchers, fake goods and account take over, almost doubles. Cyber-criminals’ capabilities are only advancing with digitalization and pursuing bigger and more advanced targets. This threat to online businesses is real and substantial.
2. The fashion industry is the most targeted:
Our research showed that out of all the targeted companies, 72% of fraudulent refunds occur in the fashion industry, making it the most targeted industry for fraudulent refunds. Apparel and accessories is the most popular e-commerce category in the United States. In 2017, fashion e-retail sales grew 12.2 %, compared to the previous year. Given the fact that this industry is so popular, and that clothing companies are approving refunds at a much higher rate, sets this industry apart as a prime target.
3. The U.S. is the top country of origin for fraudsters:
To the surprise of many, the U.S. has been listed as the top country of origin for fraudsters with 48% of all attacks originating from the U.S.. Second to the U.S is Europe, with 32% of attacks mainly originating from Russia. Identifying the threat actor's origin reflects the attack methods and methodology they use, which in turn, provides insight into what specific findings should be looked for.
4. The highest refund limit by industry is the electronics industry:
Our research revealed that the average refund limit that threat actors offer is the highest in the electronics industry. This is not surprising due to the fact that their products are more expensive on average. Companies have different refund policies, beyond a certain threshold companies begin investigating suspicious claims. Fraud departments are willing to be more lenient in the electronics industry, as companies are less likely to be suspicious of the amounts due to the fact that the products cost more.
5. The top 3 most targeted brands are Amazon, Ebay and Apple:
The largest fraudulent refund in our research was carried out on Amazon, with an amount of $1259. Amazon, Ebay and Apple have the largest revenues in this sector and are the most popular by demand, drawing people to them by their reputation. Amazon and Ebay make up 8% retail e-commerce sales worldwide, which amounted to 1.86 trillion US dollars in 2016. Amazon's revenue of $135.99B and Ebay's earnings of $8.98 billion, make them a prime target and at a statistical advantage in our research when compared to other companies.
We are living through a digital transformation that exposes companies to numerous threats and threat actors are seeking to penetrate any possible gaps. Their efforts are continuously advancing and businesses need to keep up with their pace in order to mitigate these threats. Your digital footprint and online interactions expose your business to the risk of cyber fraud. So, don't sit back, take action. Protect your organization today and uncover your blind spots.