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Online shopping fraud up—particularly in two categories

BY Marianne Wilson

E-commerce fraud is on the rise, but some categories — and states — are taking a particularly bad hit.

Total online shopping fraud increased 30% in 2017, according to a report from Experian Information Systems. The rise was most dramatic in shipping, where it rose to 37% in 2017 over the previous year, and billing, where the rate increased 34%. (Shipping fraud occurs when a criminal uses their address for the delivery of stolen goods purchased online. Billing fraud occurs when the victim’s address is tied to the payment account used to purchase the stolen goods.)

From a regional perspective, the Western U.S. saw a nearly 60% increase in attack rates for shipping fraud. The North Central region saw a 50% increase in billing fraud.

Overall the data showed that 50% of total online fraud attacks were from Delaware, Oregon, Florida, New York and California. Delaware and Oregon are the riskiest states for both billing and shipping fraud for the second year in a row and continue to see a significant increase in shipping attack rates, with Delaware increasing over 300%, and Oregon just under 300%.

In more findings:

• The top five riskiest states for shipping fraud were Delaware, Oregon, Florida, New York and California. Nearly half of all shipping fraud attacks happened in these states as they made up 27.6% of all e-commerce transactions from a shipping perspective.

• The top five riskiest states for billing fraud were Delaware, Oregon, Washington, D.C., Florida and Georgia. The top 5 states for billing fraud made up about 18% of overall fraud attacks.

• The top riskiest ZIP codes in America for online fraud were all near international airports and seaports because these are ideal locations for reshipping stolen merchandise quicker before victims or card issuers can take action. Beaverton, Oregon, is home to the ZIP code that has the highest shipping attack rates among all eligible zip codes in the U.S., with billing fraud rates at 21.8% and shipping fraud rates at 27.4%.

• In 2017 among fraudulent transactions, 53% of those took place through an internet browser while 29% happened on a mobile device.

• $855 was the average amount lost per ZIP code for online shopping fraud in 2017.

• Credit card fraud was the most common form of identity theft in 2017, according to the FTC. In 2017 among the fraudulent transactions, 92% of those used a credit card, while 7% happened through direct billing, third-party transfers or prepaid gift cards.

For the full report, click here.

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Survey: The products—and brands—most likely to be stolen from stores are…

BY Marianne Wilson

Shrink costs U.S. retailers a staggering $42.49 billion during 2017-2018.

That’s according to the 2018 “Sensormatic Global Shrink Index” from Tyco Retail Solutions, which found that the most likely to be stolen from U.S. stores included clothing, cosmetics, jewelry and confectionery, as well as consumer electronics. The brands targeted the most included Guess, Gap, Revlon, Apple (and Beats), Samsung and Sony.

U.S. fashion and accessories stores had the highest rate of shrink by retail vertical, the survey found. Office equipment stores had the lowest.

Tyco commissioned global retail market intelligence provider PlanetRetail RNG to conduct the report, which included over 1,100 retailers across 14 countries representing the world’s leading economies and 13 vertical markets. They operate over 229,000 stores. On a global scale, shrink cost retailers nearly $100 billion globally last year.

Shrinkage was highest in the U.S. at 1.85%, of sales during 2017-2018, while Europe (1.83%) ranked second.

Key U.S. findings include:

• External theft/shoplifting (including organized retail crime) make up the most significant percentage of losses, at 35.55% of lost sales, slightly above the global average. Internal shrinkage (24.54%), including employee theft, was the second largest source of losses, followed by vendor and supplier losses (21.47%).

• The average value of each ORC incident in the USA during 2017-2018 was $1,401.68 (or $131.72 more than the global average). Other external incidents, including shoplifting, amounted to $89.80 (or $16.86 more that the global average) compared to all other countries surveyed. Internal sources, including employee theft, were worth $12.75 more in the USA, at $71.75, compared to the rest of the world.

• After electronic article surveillance (EAS), alarm monitoring is the next most popular loss prevention investment, followed by access control systems, exception-based reporting and closed-circuit television (CCTV).

• The country ranked fifth for overall shrink, but has the highest shrink dollars based on being the world’s largest economy.

• Fashion and accessories have the highest rate of shrink by retail vertical, with shrinkage as a percentage of revenue coming in at 2.43%. Convenience stores and home, garden and auto stores had a rate of 2.05%, followed by drug stores, at 2.03%.

• The sector with the lowest amount of shrink (as a percentage of revenue) was office equipment, at 1.26%.

“Best in class retailers are optimizing their physical stores by ensuring that operational controls are in place for growing problems such as retail shrink,” said Catherine Walsh, VP and general manager, Tyco Retail Solutions. “The Sensormatic Global Shrink Index benchmarks retailer performance globally and sheds light on other factors affecting loss prevention.

To view the full report’s findings click here.

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Bloomingdale’s uses machine learning to evaluate employee knowledge

BY Deena M. Amato-McCoy

Bloomingdale’s can now pinpoint which of its employee learning programs are generating results — and by how much in real dollars.

The Macy’s division has deployed Axonify Impact, (from Axonify), a learning attribution engine that uses machine learning to evaluate the data collected through training programs. Results reveal the direct impact that employee training programs are having on real business metrics, such as increases in revenue or decreases in expenditures.

As employees interact with the platform, the technology’s machine learning capabilities reveal which programs are generating the greatest impact, and how employee knowledge and participation influence business results. It also uncovers gaps, and makes real-time recommendations to frontline managers when a business target is at risk.

At Bloomingdale’s, the platform has played a large role in helping reduce safety incidents. The platform automatically ties the retailer’s training efforts to how well it is reducing its overall safety claims. Bloomingdale’s has attributed about one third of this safety claim reduction to training efforts on the platform, which translated to a savings of $3 million in one year.

“At Bloomingdale’s, we’re always digging deeper into the effectiveness of our training programs and content to understand exactly how they impact business results,” said Chad McIntosh,VP of asset protection and risk management of Bloomingdale’s. “For most companies, making these connections is incredibly difficult and time-consuming.”

Bloomingdale’s can now easily identify where “learning has benefited our company, because we can tie training efforts directly back to business results,” he added. “But what’s most powerful to me is that Impact shows us exactly what we need to do to drive a greater effect on our business. This just hasn’t been possible before.”

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