July 2020

COVID-19 and E-Commerce Fraud

Each month, we’re sharing insights from Sift’s global data network on how COVID-19 is impacting e-commerce. The map illustrates monthly instances of fraud by region.

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Market Snapshot:

Most impacted verticals and fraud rates*

Total traffic and fraud rates

The graph below shows how COVID-19 is impacting e-commerce merchants throughout the Sift global data network, which uses real-time machine learning to analyze 35 billion events per month—e.g., actions that Sift customers send to our network, such as login attempts, account creations, or transactions—to surface new fraud signals and trends.

FebruaryMarchAprilMayJuneJuly2.0%2.5%3.0%Event VolumeFraud Rate

Merchant traffic and fraud rates by vertical

The following data represents 7-day moving averages throughout the current month to illustrate how COVID-19 is impacting merchants by vertical. Note that in some cases, slowdowns in traffic are driving fraud rates higher because the average number of fraud attacks is being calculated against declining event volumes.

Digital e-commerce

Current fraud rate: 5.3%

Overall traffic and transactions in digital e-commerce are up this week, with fraud rates trending down. Though there was a significant uptick in total instances of fraud in this sector two weeks ago, that number began trending down over the past seven days. It’s clear that the economy is still very much in flux and fraudsters continue to exploit market unrest. Volumes will likely continue to fluctuate across digital e-commerce as the market reacts to loosened restrictions and significant economic changes in multiple verticals, with opportunistic fraudsters ready to take advantage of the uncertainty.

FebruaryMarchAprilMayJuneJuly3.0%4.0%5.0%Event VolumeFraud Rate

Ticketing and events

Current fraud rate: 0.6%

Volumes rose in the ticketing and events space this week, with fraud rates unfortunately following suit. Recent upticks in traffic and transactions were likely due to parts of the economy opening back up. However, instability over the past couple of weeks is probably related to reinstated lockdown orders and delayed reopening plans resulting from climbing cases of coronavirus around the world. Merchants should continue prioritizing secure experiences for their customers, and focus on safely navigating a restless market.

FebruaryMarchAprilMayJuneJuly0.0%2.0%4.0%Event VolumeFraud Rate

Travel and transportation

Current fraud rate: 2.8%

Though global travel bans quickly cleared the skies and the streets as coronavirus rapidly spread across the planet, volumes across this vertical have oscillated on a weekly basis. This week, traffic and transaction volumes are down, with fraud rates trending up after a three-week downturn. Consumers and merchants alike should stay vigilant, with fraud rates about 26.4% higher than they were last year at this same time.

FebruaryMarchAprilMayJuneJuly2.0%4.0%6.0%Event VolumeFraud Rate

Physical e-commerce

Current fraud rate: 1.7%

This week in physical e-commerce, volumes are up, but fraud rates are trending down after a two-week spike. This could be due to a variety of responses to COVID-driven restrictions being lifted and changed; some consumers have been returning to brick-and-mortar shops as they reopened, while others continue to take advantage of no-contact shopping options. Either way, it’s clear that fraudsters have not slowed their efforts to exploit economic fluctuations, and merchants should continue to build flexibility and adaptability into their fraud mitigation efforts.

FebruaryMarchAprilMayJuneJuly1.0%1.5%2.0%Event VolumeFraud Rate

Education

Current fraud rate: 11.2%

As concern over coronavirus grew, online learning platforms saw an avalanche of traffic as teachers and students pivoted quickly to virtual classrooms and content. Fraud rates in this vertical are down this week, but education still currently shows the highest fraud rate across the entire Sift network. Traffic and transaction volumes in online learning dropped steadily for about a month after graduations took place, and jumped as summer courses started up—they’ve continued to rise over the past week.

FebruaryMarchAprilMayJuneJuly12.0%14.0%16.0%Event VolumeFraud Rate

Financial services

Current fraud rate: 1.08%

Event volumes in the financial services space (e.g., banks, insurance providers, and credit unions) dropped this past week, though fraud rates rose slightly. The impact of businesses closing their doors or changing strategy over the course of the pandemic, coupled with far-reaching quarantine orders, has been immense. Some individuals and institutions are spending more conservatively and keeping a more watchful eye on finances, making this vertical an unattractive (though clearly not invisible) target for fraudsters.

FebruaryMarchAprilMayJuneJuly1.0%1.5%2.0%Event VolumeFraud Rate

Food and beverage

Current fraud rate: 0.86%

Consumers have changed how they dine, where they shop, and how they pay. In light of social distancing, they’re taking steps to limit physical contact through mobile payments, food and grocery delivery, and BOPIS (buy online, pickup in-store), initially causing significant increases in volume. This week, those volumes are up, with fraud rates also on the rise. Shifting demand is likely impacting volume-to-fraud ratios, as opposed to there being any significant difference in fraud attempts.

FebruaryMarchAprilMayJuneJuly0.8%1.0%1.2%Event VolumeFraud Rate