Expectations are high that holiday shopping will look quite different this year. Unfortunately, this uncertainty is allowing fraudsters to take advantage of consumers already on edge during a time of unprecedented change and upheaval.
Due to the COVID-19 pandemic, in-store shopping at brick and mortar stores will be significantly curtailed. Already, 30 percent of Americans plan to avoid in-store shopping as much as possible due to health concerns, according to Kount’s “The 2020 Holiday eCommerce Guide.” Recognizing the risks associated with hosting massive crowds of shoppers during a pandemic, major retailers, including Target, Best Buy, Walmart and Kohl’s, have all announced they will be closed on Thanksgiving this year.
In any event, the holiday season is already well underway, after kicking off unofficially with a hugely successful Amazon Prime Day (October 13-14), and is expected to last much longer than usual. Home Depot, for example, has announced a two-month Black Friday shopping season extending from November 1 through the end of the year, with holiday pricing available throughout that period.
Fraudsters Capitalize on Uncertainty
With the promise of an extended holiday season and a strong push toward online shopping, credit union executives should keep a wary eye on three concerning fraud trends:
1. Account Takeovers. Since the start of the COVID-19 pandemic, eCommerce account takeover fraud (ATO) rates have jumped by 378 percent. Among victims of such fraud, 41 percent reported that payment details were stolen and used to make purchases, 37 percent had money taken directly out of their accounts and 37 percent had reward points or credits stolen and used to buy goods or services, according to Sift’s “Q3 2020 Digital Trust & Safety Index.” Credit unions are clearly worried, as evidenced by the 46 percent of surveyed participants in CO-OP Financial Services’ October 8 FraudBuzz webinar who responded they were most concerned with ATO this holiday season.
2. Curbside Pickup. Another rising area of fraud targets “Buy Online, Pickup in Store,” or BOPIS. Retailers are increasingly offering curbside pickup. Criminals have identified this channel as a point of weakness, recognizing it as a new channel with loose in-person authentication protocols.
3. eGift Cards. The third area of risk expected to rise this holiday season is eGift card fraud. This is nothing new — fraudsters have long targeted gift cards due to their anonymity and difficulty in being traced, and each year scammers steal $950 million through this channel, according to Kount. Common methods include purchasing gift cards with stolen payment data or asking for return credit in form of a gift card instead of cash or exchange. Some of the bolder schemes have used account takeovers to buy gift cards in bulk or involved the hacking of merchant POS systems to steal batches of gift card numbers.
How to Keep Your Members Safe
Of course, consumers are not powerless while shopping in-store or online, and your credit union has an important role to play in helping your members protect themselves.
Talk to your members about common-sense online security to help protect against ATO fraud, which starts with using unique, strong passwords across their various online shopping sites. Also encourage them to use multi-factor authentication when available on eCommerce sites. It requires an extra step before checking out, but offers an extra layer of protection, because a fraudster is unlikely to possess both the consumer’s passwords and their smart phone or another device.
Lastly, urge your members to sign up for a password management system, which can protect all their unique codes and allow them to be used across various shopping websites securely and conveniently.
It’s been an unusual year, to put it mildly. But your credit union can do its part to keep the Grinches at bay and help ensure the holiday spirit stays alive this shopping season.