Study: E-commerce fraud increases more than 30% in 2016

As the industry makes the switch to EMV, data breaches and automation are driving online fraud more than ever.



In fact, e-commerce fraud attack rates have spiked 33% over the last year, according to the “2016 E-commerce Fraud Attack Rates,” from Experian. The report analyzed millions of e-commerce transactions and ranked the top states, cities and ZIP codes for shipping and billing fraud across the United States.



As EMV works to protect payment card information at store level, the process has prompted fraudsters to refocus their efforts online. By targeting card-not-present transactions, hackers are gaining access to consumer accounts, billing information and identity data, enabling more successful fraudulent attempts.



And fraud is happening everywhere across the country.



Broken down by region, billing fraud has increased 25% in the West, with shipping fraud jumping 32%. In north central U.S., billing fraud increased 16%, while shipping fraud spiked by 32%.



In the south, billing fraud attacks increased 32%, and shipping fraud jumped 41%. The Northeast reported billing attacks increase 25% while shipping fraud was up 44%.



Overall, 10 states — Alaska, Colorado, New Mexico, Idaho, North Dakota, Maine, Montana, Iowa, South Dakota, and Wyoming — saw an increase of over 100% in shipping fraudulent orders.



Meanwhile, Delaware, Oregon, and Florida, were the top-ranked states for billing and shipping e-commerce fraud in 2016. Both Oregon and Delaware saw an increase in e-commerce billing fraud attacks of over 200%. Three states, Florida, California and New York, accounted for more than 70% of total e-commerce billing fraud attacks.



South El Monte, California, was the top ranked city for both shipping and billing fraud in 2016. The billing fraud attack rate was nearly double that of the second-ranked city, Port Reading, New Jersey.



Miami, was home to the most ranked ZIP codes for e-commerce fraud, accounting for 17 of the top 100 for shipping fraud, and 20 of the top 100 for billing fraud, the report said.



"One of the major drivers for the increase in fraud attacks is the contin-ued adoption of EMV terminals for chip-and-pin credit cards,” said Ad-am Fingersh, Experian general manager and senior VP of fraud and identity solutions.



“While these cards reduced counterfeit credit card fraud at the point-of-sale, they have driven fraudsters online. This pattern is similar to what other EMV markets saw when transitioning to chip-and-pin cards," said Fingersh. "As more compromised data becomes available from breaches, it's easier for fraudsters to get their hands on identity data requiring con-sumers and businesses to stay diligent in protecting themselves."