Shopping Fraud: Charcoal in Retail Stockings This Holiday Season

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For many of us, the holidays are a time to get together with family and friends and exchange gifts.

But they also mean good news for fraudsters and scammers.

Card not present (CNP) tactics, credential theft, gift card co-optation, advanced phishing scams, refund abuse – these are all freebies that can continue to be given to bad actors” fraudsters).

American Express and Accertify teamed up 12 years ago to help thwart these scams. And, as Tina Eide, Executive Vice President, Fraud and Banking Product Risk at American Express, noted: "As we worked together, we constantly identified new trends and techniques used by fraudsters. ."

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"The fraud threat landscape is constantly changing and we need to anticipate what's to come to help provide protection," she said.

Here are some threats retailers need to watch out for and be vigilant about during this holiday shopping season (and the inevitable return), according to Mark Michelon, CEO of Eide and Accertify.

Credentials captured

Bots are growing in sophistication and usage — and attack methods.

In particular, bots conducted credit master attacks, Eide said. This is the tactic of trying multiple combos in logins and transactions to guess the details and perpetrate either an identity takeover or approved card transactions.

Fraudsters have stepped up their use of them to be more efficient and cover more ground, she pointed out. Additionally, one-time passcode (OTP) bots make robocalls to customers to access OTPs required for account logins and 3D security protocols.

"Friendly Fraud" Isn't Really Very Friendly

First-party misuse or refund abuse — less commonly known as “friendly fraud” — occurs when consumers make legitimate purchases and then dispute the transaction or claim that the item n was ever delivered, Michelon explained.

“With online shopping at an all-time high, orders placed for delivery are increasing dramatically, and some delivery companies are still practicing contactless delivery,” he said.

So regardless of the value of the order, there may not be a signature as proof of delivery, he said. Fraudsters can then pretend they never received an order (when it did) and will demand a full refund or duplicate shipment.

This can happen for many reasons, with buyer's remorse being a common culprit, Michelon said.

It also impacts retailers with recurring subscription fees, he said. Instead of trying to cancel a subscription, a customer can simply dispute charges. And, another “less malicious” example is when consumers don't recognize a charge or merchant descriptor on their statement, think a charge is suspicious, and then dispute it.

Prevention, not just detection

Scammers of all kinds should not be overlooked. Unsurprisingly, they are gaining in sophistication. As such, Eide said, "It's important that organizations and consumers remain vigilant."

Organizations should be aware that gift card scams are especially common during the holiday season. They should actively warn customers never to buy gift cards from a third party they don't know about, and also to be wary of claims...