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Certain facets of ecommerce have been especially hard
Insider’sreport hit, including online gaming sites, which saw chargebacks
jump by more than 18 percent in March and April, and
on payments digital content providers, which saw a 31 percent increase,
according to Monica Eaton-Cardone, co-founder of Charge-
backs 911.
Eaton-Cardone believes many consumers who may not
have done so in the past are using the chargeback mech-
Fraud in a time anism to shrink credit card bills. Making matters worse,
merchants overstretched by order volume, short-staffing
and supply chain/fulfillment problems are neglecting to
of COVID-19 dispute chargebacks, she said.

Visa is addressing the problem with a new COVID-19 Dis-
By Patti Murphy pute Monitoring Program, which encourages card issuers
to contain unnecessary chargebacks by requiring more
raud is a perpetual problem in the payments detailed information when filing disputes. Those that
space. But as the COVID-19 pandemic rages drop the ball and file more than 50 disputes a day that are
on, fraudsters are racing out of the woodwork. deemed invalid, now face costly fines.
F Fraudulent chargebacks, ecommerce account
takeovers and phishing attacks are all trending upward, Account takeover fraud also has become more problematic.
and in the process, threatening the financial stability of ATOs involve fraudsters gaining access to a legitimate cus-
businesses and the integrity of the payments system. tomer's ecommerce accounts and making purchases. Pur-
chases using compromised store accounts are tough to de-
Here’s how Michael D’Ambrosio, deputy assistant direc- tect because they look like they’re being made by legitimate
tor of the Office of Investigations at the U.S. Secret Service customers. And the implications for merchants are huge.
described it in a recent op-ed published in The Washington Not only do they lose merchandise and money, but they
Post: "Swindles, scams and outright thefts have long been also risk reputational damage.
a feature of major disasters. The more catastrophic the
event, the more active the fraudsters. However, the COV- A recent survey by the fraud prevention company Riskified
ID-19 pandemic provides criminal opportunities on a scale found 65 percent of consumers would likely stop shopping
likely to dwarf anything seen before. The speed at which an ecommerce site if their accounts were compromised.
criminals are devising and executing their schemes is truly More than half said they would delete their accounts, 39
breathtaking." percent said they would switch to a competitor, and 30 per-
cent said they would encourage friends to stop shopping
The Federal Trade Commission said it fielded nearly 43,000 on that site.
consumer complaints between Jan. 1 and May 13, 2020, with Don’t take the hook
43.5 percent resulting in financial losses. Fraudulent credit
card transactions (totaling $5.2 million) and wire transfers Phishing attacks have exploded in recent months, too, with
($7.9 million), combined, accounted for 42 percent of total coronavirus as the hook, and emails requesting bogus pay-
financial losses reported, the FTC said. ments the ultimate goal. Healthcare companies have been
especially hard hit, according to the FBI.
Although the FTC has not published fraud data specific to
the coronavirus, a flurry of published warnings suggest Once employees take the hook by opening a link in a phish-
the agency is seeing an uptick. "Scammers have no shame, ing email, fraudsters can burrow into company systems
and nothing – not even a global health crisis – is off limits," and study vendor relationships, learning billing practices
Karen Hobbs, assistant director of the Division of Consum- and executives’ email style, eventually emailing what ap-
er and Business Education at the FTC, wrote in an advisory. pear to be legitimate requests for payments to what seem
Chargebacks, ATOs rise like legitimate vendors. Business email compromise at-
tacks accounted for half of all reported cybercrime losses
One irksome type of fraud on the rise with the pandem- last year – an estimated $1.77 billion, the FBI said.
ic involves bogus chargebacks, or what some refer to as
"friendly fraud," which, of course, is anything but friendly. Fraudsters see crises like the COVID-19 pandemic as op-
Not surprisingly, the ecommerce channel, which has seen portunities; it’s more important than ever that payment
sharp increases in transaction volumes as more consumers services companies step up fraud-fighting efforts.
shop from home, is a major target, experiencing a 40 per- Patti Murphy is senior editor at The Green Sheet and co-host of the
cent increase in recent months by some accounts. Merchant Sales Podcast.. Follow her on Twitter @GS_PayMaven.

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