Increased fraud in online fashion

The COVID-19 outbreak has led to a huge boost in e-commerce. The growing e-commerce has led to a rise in most types of fraud, online fashion retailers claim. One in three have experienced more online payment fraud. Meanwhile 44% have experiences a rise in account takeover and promotion abuse.

Research by Ravelin shows that 32% of fashion retailers saw an increase in online payment fraud over the past twelve months. Meanwhile nearly half have experienced a rise in account takeover and promotion abuse. Additionally, 38% saw an increase in friendly fraud, while over half (54%) saw the amount of refund abuse grow.

Fraud rates are higher in online fashion

Among fashion retailers these shares are higher than among any other type of retailer. One of the key reasons for the growth of refund abuse might be that more consumers are ‘wardrobing’. Which means they are purchasing clothing online for the sole purpose of taking photos for social media, before returning them.

“The conditions of the pandemic have created a veritable petri dish for the growth of fraud,” Mairtin O’Riada, co-founder and CIO at Ravelin, comments. “Retailers are scrambling to drive e-commerce and are handling extremely high volumes of transactions online, while also trying to fulfill a growing number of online deliveries.”

Mitigating the threat or fraud

Mairtin O’Riada says the fraud teams of online fashion retailers now have to mitigate the threat of fraud to protect profit margins. But still, nearly a quarter of fashion brands have a fraud team of five people of less. The bright side is that three quarters (76%) are now expecting to increase their fraud team size and budgets