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2017 Post-Holiday Fraud Review

posted on: Tue Jan 16 2018

How were your holiday sales? Nice? What about holiday fraud? Did you see too many naughty orders?

This blog post is the final in a series about holiday fraud trends, based on data from billions of dollars in transactions from a cross-section of Kount merchant customers. Other blog posts in the series:

Trend #1: Record-Breaking Growth in Mobile App Sales and Fraud. Mobile app sales soared 269% over the 2017 holidays. Mobile app fraud attempts increased even more: 293%. Part of the reason for this triple-digit explosion is the relatively small size of the mobile app market universe last year. In just 12 months, the proliferation of mobile apps and consumer acceptance of them have both increased tremendously. The other part of the equation is that as consumers have flocked to mobile commerce, so have fraudsters. This surge in mobile fraud is due to a number of factors:

  • The low cost of mobile devices makes switching cheap and easy when a fraudulent device is identified by antifraud systems.
  • Ability of fraudsters to easily “hop” hot spots and networks to mask their identity.
  • The nature of wireless network infrastructure can make detecting true geo-location, IP address, etc.—useful in spotting repeat offenders—much more difficult for some fraud screening technologies (not Kount’s).
  • Many online businesses and eCommerce merchants are playing catch up when it comes to fraud prevention in the mobile channel—and fraudsters know and exploit this vulnerability.

Trend #2: Better Fraud Prevention Scares Fraudsters Away in Search of Easier Targets. Kount customers saw a much smaller increase in desktop fraud attacks: just 14%. Compare this to the 40% increase in card-not-present (CNP) fraud reported industry-wide in 2016. After a bit of analysis, we attribute this to the fact that these customers have had desktop sales with Kount fraud prevention established for much longer than with their mobile app sales. As a result, the repeated failure experienced by has forced them to “give up” and cease repeated attacks. For Kount customers, this results in less time dealing with fraud overall. That’s a nice holiday gift!

Trend #3: Mobile Sales (and Fraud) Are Moving from Browsers to Apps. While mobile browser sales increased a healthy 14%, that pales in comparison to the 269% increase for mobile app sales. Similarly, fraud attacks via mobile browsers ticked up only 6%, far, far less than the 293% leap for mobile app transactions. Again, this is due in part to the initial smaller universe that was the starting point for these calculations. That said, the combination of greater availability and acceptance of mobile apps helped mobile apps increase their share of overall mobile sales significantly. In 2016, mobile app sales accounted for only 18% of overall mobile sales. In 2017, their share increased to nearly 42%. The trend is clear: legitimate customers—and fraudsters are—are embracing the mobile app channel in a huge way.

 These findings point to some obvious “to-do’s” for eCommerce businesses:

  • If you haven’t deployed or improved a mobile app in the last year, you’re behind the curve and missing out on sales.
  • If you have not upgraded your mobile fraud prevention capabilities, your joy about increased mobile app sales could turn to a holiday hangover when fraud chargebacks start to mount up in the first quarter.

Download the eBook "The Download on Mobile App Fraud" and learn how to prevent mobile app fraud and increase conversions.

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