Fraudsters Get More Creative During The Holidays

The holidays bring a greater risk for criminal fraud, leaving retailers exposed if they don’t understand their “weak spots.”

During the holidays, fraudsters go to great lengths to blend their activities in with legitimate orders, according to data from orders processed by ebay Enterprise. For example, criminals choose to fraudulently purchase digital gift cards at the same time that consumers are typically returning unwanted gifts in exchange for store credit. Researchers have discovered a measurable spike in these fraudulent purchases on New Year’s Day, when many legitimate consumers are visiting stores in search of something they really want.

Another example of criminals taking advantage of consumer behaviors occurs on Christmas Eve, when fraudulent orders with overnight shipping see a significant increase. These are timed to become lost among the flurry of procrastinators making last-minute gift purchases.


Thieves, much like children during this season, hate to wait to collect their goodies, preferring overnight delivery for their fraudulent orders. In contrast, orders shipped with second-day delivery during the holiday season generally have low fraud rates.

Debunking Holiday Fraud Myths

“The holiday season brings twice the stakes for fraud, as retailers see a spike in order volumes, alongside an increase in fraudulent attacks,” said Michael Graff, Risk Manager of eBay Enterprise in a statement.

However, he added that it’s also important for retailers to continue to embrace new business opportunities, even if they carry some risks. “Businesses must be mindful to not give in to strategies that are overly cautious and end up killing good orders, but instead craft a fraud management plan that balances automated intelligence with the benefits of human supervision,” said Graff.

eBay Enterprise’s Holiday Fraud Index identified five myths that can hurt a business’ bottom line:

Myth #1: Digital Gift Cards Are Too Risky To Sell: While these cards can be intimidating for retailers because they are the equivalent of cash and are delivered quickly, their benefits (including popularity among Millennials) outweigh the risks.

Myth #2: High Distance, High Dollar, High Expedite Equals High Fraud Risk: These factors don’t guarantee fraud, just as short distances, low dollar values and slower shipping don’t ensure legitimate orders. Retailers need to layer on additional order attribute metrics to craft an effective fraud discovery and prevention strategy.

Myth #3: Machine Learning Can Replace Manual Review: While it’s true that e-Commerce needs to improve technologically to combat unauthorized activities, there is still significant value in manual reviews. There are nuances in some good orders that even the most sophisticated computer programs will mistakenly label as fraud.

Myth #4: International Orders Are Riskier Than Domestic Ones: International orders are certainly tricky for retailers, but more than 97% of orders shipping internationally for eBay Enterprise clients have been legitimate.

Myth #5: Freight Forwarders Are Inherently Bad: Freight forwarders — also known as mail forwarding companies — have a negative reputation in some e-Commerce circles, but hundreds of thousands of good transactions flow through these freight forwarders every year.

“There is no question that managing online fraud is a top imperative facing retailers today,” said eBay Enterprise President Tobias Hartmann in a statement. “Ensuring the right mix of automated and manual review is essential, but can be difficult for businesses to navigate on their own, as we’ve seen criminals try to find weak spots in fraud prevention by bombarding retailers with attacks. Many fraud management strategies employed by retailers can cause more harm than good, stressing just how important it is to partner with a trusted resource.”

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