Dive Brief:

• According to the Forter Fraud Attack Index emailed to Retail Dive, online apparel and accessory companies saw an increase in fraud attacks by 44% year-over-year. The report noted that criminals can buy fashion merchandise and resell the items for near retail price to shoppers seeking a deal.

• The report also found that home and garden saw a 50% decrease in fraud attacks, while the beauty industry experienced a 36% decrease (and fraud attacks could continue to decrease as that market becomes more saturated). As for online marketplaces, the sector saw a 24% decrease in fraud attacks, according to the report.

• Retail loyalty programs, omnichannel shopping methods and customer identity manipulation have each experienced growth as a method for fraud attacks, increasing 89%, 23% and 30% respectively.

Dive Insight:

Building on previous research into retailer fraud, the Forter report offers some insight into which parts of retailers' operations are especially vulnerable to fraud, chief among them being loyalty programs. According to the report, consumers' growing expectations have resulted in retailers placing fewer security measures, which have turned loyalty points into digital currency for cybercriminals. 

The problem is fraud imposes a hefty cost on retailers. Per a LexisNexis Risk Solutions report, each dollar of fraud costs retailers $3.13, an increase from $2.40 in 2016. Analysts expect card-not-present fraud to increase to $130 billion by 2023. 

While retailers may be focused on capitalizing on their omnichannel strategy, previous research has also pointed to the holiday season as prime time for fraud. According to the report, retailers that offer in-store returns are likely to see that policy abused. Thanks to easy pickup options, fraudsters often take the shoppers' personal information, order products to the store and pick them up as that shopper. Overall, returns abuse costs retailers in the United States more than $17 billion annually, according to a statistic cited in the report.