CHICAGO—With Christmas almost here, it’s time credit unions pay even closer attention to ecommerce fraud as crooks have been loading their sleighs with stolen dollars at a record pace this holiday season, reports TransUnion. In response, the company is sharing strategies for making the credit union as Grinch-like to criminals as it can possibly be.
“This time of year, and especially this year, desperate times call for desperate measures,” Sean Flynn, director, credit unions at TransUnion, told CUToday.info.
Flynn based his perspective TransUnion’s Q4 2023 US Consumer Pulse Study, which contains some eye-open fraud data, including:
- The average amount of suspected digital (ecommerce) shopping fraud during the Cyber Five days was up 12% in the U.S. compared to rest of the year
- The average number of suspected digital fraud attempts on any given day during that holiday shopping period globally was 15% higher than the same period in 2022, yet 50% lower than during the rest of 2023 (Jan. 1, 2023, to Nov. 23, 2023)
- 3.6% of all global e-commerce transactions reviewed during the Cyber Five days were suspected fraudulent
- Suspected digital fraud rate was the highest on Thanksgiving Day
Sean Flynn
‘A Lot Higher’
“During the five days between Thanksgiving and Cyber Monday, we found that 2.4% of U.S.-based ecommerce transactions were suspected fraudulent,” said Cecilia Seiden, VP of retail business at TransUnion. “And those fraud attempts during the holiday period are a lot higher than they are during the rest of the year—about 12% higher and about 18% higher than the same time period in 2022.”
Seiden said the holiday period is a peak time for fraudsters, and that's really driven by four key reasons:
“The first one is fraudsters think it's going to be easier for them to hide among all of that heavy transaction volume and more easily evade detection by merchants with their fraud tools and systems,” she said. “The second is it can be easier to scam consumers when they're already in the shopping mode and interacting with merchants. The third is you know fraudsters are also motivated by deals using other people's money to purchase popular products, and then they can resell those and maximize that spread. The fourth is the challenging economic conditions right now are driving increased need for fraud.”
Where to Focus
As credit unions turn up their holiday fraud radar this year, they should be focusing on a growing fraud indicator, Seiden advised.
“It's important to look at the top driver of fraud this year, which is unusual transaction volume coming from either a single IP address or from a single device,” Seiden advised. “That is really indicating increased use of automated attacks. So, credit unions (should) have the tools in place to protect themselves against that type of attack.”
Meanwhile, Flynn noted that even with Christmas almost here, it’s never too late to provide more education to members—reminders on how to play a role in the fraud fight.
“Consumers continue to express concern about being victimized during this popular shopping period,” he said. “Our Pulse Study found that most American consumers, 69%, are extremely, very or moderately concerned with being victimized by online fraud this holiday season—an increase from 64% in 2022.”
A Reminder for Members
One fraud tactic to remind consumers of, according to TransUnion, is that as many people hustle to get last-minute gifts ordered they are likely to be tempted by what appear to be great deals, but are in fact just scams, including fake websites.
Cecilia Seiden
“Make sure your members have their guard up now,” Seiden said. “If a deal seems too good to be true, it probably is. If somebody you have not reached out to is asking you for personal information, don't give it out. It's better to always find an official customer service phone number or website and then initiate that outbound request to make sure that you're dealing with somebody legitimate.”
And One More Thing
In addition, and it’s no surprise, Flynn advised that it’s time to focus not just on card fraud, but identity fraud, which has been getting more attention from crooks as consumers do much more purchasing online.
“In addition to internal fraud controls and dynamic consumer card controls members have in their hands, when the credit union is originating credit card accounts, or even personal loan accounts, make sure they're looking for things like synthetic identity fraud—making sure they're trying to combat account takeover,” he said. “There are a number of tools to help detect this with scores or attributes that help identify a potential synthetic fraud application. We’ve got a number of credit unions today that are starting to add identity and fraud tools to their monthly portfolio management routines, just to make sure that things aren't evolving in a negative way.”