Ecommerce marketplaces and their merchants alike have a lot to celebrate so far this holiday season, with higher sales. But there’s also good reason for caution. Suspected online fraud and malicious websites are also on the rise.
Cyber 5 spending increased over last year
U.S. consumers reportedly spent more this year than in 2021 during Cyber 5 – the five-day period from Thanksgiving Day through Cyber Monday. This was based on information from Adobe Analytics, which showed that consumers spent $35.27 billion during the holiday period in an estimated 1 trillion online visits to U.S. retail websites.
The increased sales during this period, when some of the best deals of the season are advertised, isn’t all that surprising. When looking at holiday shopping forecasts, many had predicted that consumers would begin shopping early this year and would also be heavily focused on getting the most bang for their buck.
Consumers were also expected to spend a good portion of their overall shopping budget during the long holiday weekend. The 2022 Deloitte Black Friday Cyber Monday survey, for example, estimated that consumers would spend half of their overall holiday shopping budget during this period.
While the uptick in sales during the early days of the holiday season bodes well for profits, there’s also reason for caution. Suspected holiday shopping fraud in the U.S. is also on the increase.
Ecommerce fraud is on the rise
Bad actors continue to develop increasingly sophisticated schemes to dupe merchants and consumers out of their hard-earned money. A new coordinated master manipulator scheme has recently made headlines. This targeted attack on U.S. retailers, believed to be perpetrated by criminals tied to human trafficking, began with a test attempt aimed at a small group of retailers in similar industries.
This initial attempt was believed to have been perpetrated with the intention of testing and honing the criminals’ methods and also to see how retailers’ systems responded, before moving on to larger targets. Hundreds of merchants have now been affected.
Malicious websites also typically increase during the holidays. According to Check Point Research, malicious ecommerce sites increased by 178% in 2021 from October to December.
Responding to consumer worries about online fraud
According to recent research released by Paysafe, 59% of consumers are more concerned about becoming a victim of fraud now than they were in 2021. Marketplaces have an opportunity to allay these worries by implementing security measures.
Consumers seem to be growing more accustomed to trading speed for security (44% of respondents were satisfied with the mix of security and convenience, vs. 26% at this time last year.) Marketplaces that implement security measures may realize a benefit to their reputations and by extension, their revenue.
How can payment providers and marketplaces mitigate fraud risk?
Online marketplaces have a heavy burden this holiday season to manage the increase in online fraud, meet expectations for smooth, safe transactions, and simultaneously maintain compliance. Our innovative solutions can help mitigate risk while promoting growth and success this holiday season and year-round.
MerchantView is a powerful data- and AI-driven tool that helps marketplaces and payment providers to detect and eliminate risky merchants at onboarding. In addition, it provides continuous monitoring and can assist with merchant retention.
MarketView empowers online marketplaces to grow while remaining compliant, by detecting and removing fake, illegal, and dangerous products.
Take the time to learn more about our innovative solutions today.