For most Americans, the holidays are full of shopping, festive candlelight dinners, and family gatherings. However, for some consumers, one number on their credit card statement stands out among all those other numbers—the dollar amount from unauthorized charges made during the holidays.
In light of this fact, credit card fraud, in general, is on the rise, and so is retailers’ enthusiasm to reach potential customers. Between 2011-2012 alone, retailers doubled spending during this time of year. While this holiday spending is unsurprising and arguably to be expected, the way that those in charge of financial transactions expect to manage this growth is what has industry experts (and many other people) worried.
Such data points to a worrying trend in which businesses tend to put security measures on the back burner to make more money or save time. For many companies and customers alike, an increase in holiday spending results in a corresponding rise in holiday credit card fraud.
This phenomenon is even more problematic because this holiday season may be the most lucrative for businesses. Many are expected to sell billions of dollars worth of goods and services, potentially making this season’s credit card fraud statistics even more alarming.
According to a report published by Javelin Strategy & Research, in 2012, holiday shopping topped $465 billion. This figure is expected to grow this year and might even hit $500 billion, a significantly large sum.
As the holiday season progresses, the amount of money that goes through the card networks and into bank accounts will increase. Businesses will be looking at a very profitable period. Therefore they will be increasing their efforts to reach consumers, which inevitably means an increase in online sales and e-commerce transactions.
Not surprisingly, these trends have led experts to wonder what will happen to the number of credit card fraud cases and if it will, like many other things this season, become more prolific than usual.
As it turns out, these concerns may be justified since a report published by Trustev revealed that credit card fraud rates have increased during the holidays and that online shopping is often the cause of the said increase. During the last holiday season alone, 2% of all e-commerce sales were fraudulent. The new holiday season is already starting to exhibit this trend, which is expected to continue throughout the upcoming months.
This trend has led major retailers and financial institutions alike to begin taking steps to prevent fraud. For example, Target worked with not one but two security firms to boost their credit card fraud detection system and guard against rogue salespeople. Retailers such as Nordstrom are joining them in the effort by setting up their plans to detect fraudulent transactions.
While retailers take measures to protect themselves and their customers, there is also no denying that these efforts have little impact on the overall problem. There is only so much that retailers can do to protect themselves from fraud, so it has become increasingly clear that banks must also be able to help lessen the impact of this type of fraud.