E-commerce transactions in the UK retail sector have seen a 168 percent increase in May compared to the same period last year, driven by rising online sales of electronic items, DIY supplies, home furnishings and sportswear, according to an analysis of hundreds of millions of transactions of leading UK retailers by payments software company ACI Worldwide.
The sharp increase reflects more than two months of wide-ranging COVID-19-related restrictions for brick-and-mortar shops in the UK, with millions of consumers now shopping for goods, services and entertainment online. Other sectors that have seen a spike in online sales are banking (359%) finance (84%), and telco (36%).
“The lockdown has changed the way UK consumers shop, with shopping habits shifting online just as our work and social lives have. In the past, Brits may have preferred brick-and-mortar stores to buy items such as electronics, furniture or DIY supplies, but now many of us are happy to purchase those goods online,” said Amanda Mickleburgh, director, fraud, ACI Worldwide. “More importantly, the current crisis is likely to lead to long-term behavioral change among consumers—and retailers need to adapt and change their strategies accordingly.”
Online sales in other sectors have fallen, with travel bookings in May down 95% compared to May 2019. Ticketing was down 97% and online dating fell 48% year over year.
Fraud is on the increase too, the research shows, as fraudsters are using the surge in online activity to target unsuspecting consumers and merchants. The average ticket price of attempted fraud increased by £14 in May, driven by electronics and retail goods. During the period from January to May 2020, the fraud attempt rate by value increased to 4.3% from 3.7% during the same period last year.
Non-fraudulent chargebacks have risen 25%, with many disputes involving consumers claiming that services or goods weren’t delivered or cancelling recurring payments. Airlines and Ticketing sectors are experiencing even higher chargeback rates due to the high number of consumers trying to obtain refunds from cancelled flights, instead of accepting the vouchers many airlines and travel companies have offered. Friendly fraud is also rising, with genuine cardholders purchasing items and then either claiming not to have received them or not to have been reimbursed for returned items. Merchant delays in processing refunds due to resource challenges have contributed to increases in friendly fraud.
“Retailers and consumers must be extra vigilant as fraudsters use the current situation to obtain and use their financial data and information,” explained Mickleburgh. “Rising non-fraud chargebacks will continue to present a challenge—especially for hard hit businesses in travel and ticketing—while these merchants overhaul credit and rebooking options, dispute resolution processes, supply chain visibility and customer communication channels.”
Tips for consumers:
Beware of online requests for personal information. Coronavirus-themed emails seeking personal information are likely to be phishing scams. Legitimate government agencies won’t ask for that information. Delete the email.
Check the email address or link. Inspect a link by hovering the mouse over the URL to see where it leads. Sometimes it’s obvious the web address is not legitimate, but keep in mind phishers can create links that closely resemble legitimate addresses. Delete the email.
Watch for spelling and grammatical mistakes. If an email includes spelling, punctuation and grammar errors, it’s likely a sign of a phishing email. Delete the email.
Look for generic greetings. Phishing emails are unlikely to use a person’s name. Greetings like “Dear sir or madam” often signal an email is not legitimate.
Avoid emails that insist on acting now. Phishing emails often try to create a sense of urgency or demand immediate action. Delete the email.
Tips for merchants
- Maintain security and deliver a great customer experience, as consumer purchasing behavior—both genuine and fraudulent—has changed.
- For example: Express shipment and buy online, pick up in store delivery methods continue to grow, making transaction decision speed and accuracy critical.
- Use customer profiling and time-on-file techniques to maintain the customer experience for valued customers and ensure good transactions are still accepted.
- Expect an increase in “friendly fraud” chargebacks as a result of growing financial difficulties among consumers. Friendly fraud occurs when a cardholder receives goods but denies making a purchase or a family member makes purchase without cardholder approval.
- Monitor systems and update as necessary. Business intelligence tools and real-time monitoring lead to immediate decisions and responses. Employ rapid access to fraud intelligence to inform rules changes in real time.
- Engage frequently with web and mobile site security management. Give these teams the tools, techniques and procedures to detect, contain and mitigate botnets. And considering the presence of both good and bad bots, put business policies in place to address this issue with clarity for both teams.