Loyalty Fraud Hitting Retailers Hard

Loyalty Fraud Hitting Retailers Hard

October 17, 2019

In an effort to please customers and reward loyalty, online retailers are getting scammed themselves. Forter’s Fraud Attack Index highlights changes in online commerce across more than $140 billion in e-commerce transactions, and this year’s edition finds fraud that takes advantage of loyalty point programs nearly doubled in the last year.

“As these types of programs become increasingly popular and expected by customers, Forter has seen an 89 percent increase in loyalty fraud over the last year,” the report summary noted. “Moving forward, merchants will need to understand this evolution in methods of attack and similarly balance that alongside growing customer expectations.” 

The index also found fraud rings are on the upswing by 26 percent in the past year. Other growing forms of fraud include collusion, which saw a 32 percent increase. Buy online and pick up in store (BOPIS) and buy online and return in store (BORIS) fraud each rose 23 percent. Fraud committed via ID manipulation increased 30 percent.

Industries that saw a severe increase in fraudulent activity include:

  • Apparel & Accessories – 44 percent increase
  • Food & Beverage – 41 percent increase
  • Air Travel – 61 percent increase
  • Money Services – 48 percent increase

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Joan Goodchild