Social distancing has affected consumer shopping patterns, and a TransUnion survey found that 22% of Americans said they’ve been targeted by digital fraud related to COVID-19. The report also found a 23% increase in global e-commerce transactions in the week following the World Health Organization declaring the novel coronavirus outbreak a pandemic on March 11, 2020, compared to the average weekly volume in 2020.

Consumers are greatly reliant on online retailers during the coronavirus pandemic, and businesses must be armed to combat fraud, while making sure the company’s web and mobile platforms are bug-free.

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“It is clear that social distancing has changed consumer shopping behaviors globally and will continue to do so for the foreseeable future,” said Greg Pierson, senior vice president of business planning and development at TransUnion, in a press release. “No doubt fraudsters will continue to follow the trends of good consumers and adjust their schemes accordingly.”

Evidence of the increase in digital fraud

According to TransUnion, 22% of Americans who were targeted by digital fraud related to COVID-19 were 18-years and older.

Fraudsters are focused on exploiting retailers’ digital connections with consumers, especially now that those consumers aren’t patronizing brick-and-mortar stores, but almost exclusively shopping online. Last year, TransUnion reported this resulted in 118% growth in potential fraud originating from mobile devices.

The company’s Global E-commerce in 2020 report, from the TransUnion global fraud and identity solutions division, reported a shocking 347% increase in account takeover, and a 391% rise in shipping fraud against online retail customers, from 2018 to 2019.

“With so many reported data breaches, it’s not just about if your account will be hijacked, it’s about when,” said Melissa Gaddis, senior director of customer success for TransUnion fraud & identity solutions, in a press release. “Once a fraudster breaks into an account, they have access to everything imaginable resulting in stolen credit card numbers and reward points, fraudulent purchases, and redirecting shipments to other addresses.”

Fraudulent methods

Typical methods to take over an account include:

  • Buying login details on the Dark Web

  • Credential stuffing

  • Hacking

  • Phishing

  • Romance scams

  • Social engineering

  • Shipping fraud

Shipping fraud, and its aforementioned 391% increase, happens when a hacker takes over a customer account, but keeps the victim’s shipping address, to avoid detection. After the package has shipped, they intercept it at the carrier site and change the shipping address.

E-commerce fraud and transaction trends

  • 42% decrease in promotion abuse from 2018 to 2019. Hackers drain loyalty points or create multiple fake accounts to use the same promotion again and again (this is a big no-no for website and app terms). TransUnion attributed this decrease to fraudsters turning to more lucrative schemes such as account takeover.

  • 78% of all e-commerce transactions came from mobile devices in 2019. That’s a 33% increase from 2018. E-commerce companies want less browsing and more buying.

  • 118% increase in risky transactions from mobile devices in 2019. As more e-commerce transactions are on mobile devices, hackers want to replicate consumer behavior to evade detection.

E-commerce will thrive

“Although the death of brick and mortar has been well documented, there is still plenty of room for e-commerce growth with one report claiming online retail only makes up 14% of all global retail sales,” Gaddis said in the press release. “With so much room left for growth, it’s important that retailers stay ahead of the emerging transaction and retail trends to provide a friction-right experience for consumers and a fraudster-proof barrier.”

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