Fraudsters see a rich opportunity in apparel websites

Fraudsters have a strong desire to take over a consumer's accounts or create new accounts to commit fraud by purchasing clothes or shoes to resell or initiate other crimes or chargebacks.

The apparel sector suffered a 70% increase in fraud attacks in 2016, according to new research examining online fraud attacks from e-commerce fraud prevention provider Forter and the Merchant Risk Council.

Israel-based Forter examined more than 136 million transactions in compiling the Fraud Attack Index, discovering a nearly 80% increase in domestic fraud attacks on U.S. merchant sites in the past year. The report shows a 131% uptick in the attempts of account takeover by online payments accounts, and a 16% decline in account takeover attempts of merchant website accounts.

In summary, the fraudsters are finding the online payments accounts easier pickings.

The attack rate for various industries fluctuated, with food and beverages joining apparel as one that spiked in the past year, going up 48.9%. Attacks on the travel industry were down 33%, digital goods down 22.6%, luxury items down 8.4% and electronics down 1.8%.

“The most notable growth in fraud attack rate is within the apparel industry. Comparing the rate in Q4 2016 to that of Q4 2015 shows a significant increase of 69.9%,” said Michael Reitblat, CEO of Forter. “This may be related to the new fraudsters who’ve joined the online criminal community following EMV adoption in the U.S. and are perhaps sticking to a vertical they understand."

The trend may also reflect an increased comfort among genuine shoppers with buying and returning their clothes online, Reitblat added. The apparel industry is under attack more than ever before, the report indicated, partially because of serial-liar abuse and readily available stolen credit card credentials.

The Forter research revealed that online attacks have almost doubled for domestic orders between the fourth quarter of 2015 and the fourth quarter of 2016. However, international orders in 2016 were less risky than those in 2015 by 13%. Still, international orders remained 62% riskier than domestic orders during the fourth quarter of 2016.

In supporting the Forter research findings, Robert Capps, vice president of business development for NuData Security, said his company documented a "400% increase over the 2016 holiday season in sophisticated automation and scripting targeting large retail merchants."

NuData's biometric NuDetect fraud prevention system was able to stop these attacks, but had they been successful they would "almost certainly have culminated into new account fraud and account takeover attacks," Capps said.

When those takeovers occur against merchants, they frequently involve complex reshipping, reselling, and loyalty/rewards fraud schemes, he added.

The research also warned merchants and consumers that botnets are becoming increasingly popular with fraudsters because they can increase scale and reach, a valuable asset for fraudsters.