Large swaths of the global economy have ground to a halt as
governments scramble to stop the spread of COVID-19. In the U.S. alone, nearly 100
million people (and growing) have been directed to stay at home and
practice social distancing in an effort to limit the spread of the deadly
virus. As a result, non-essential businesses are closing, including bars,
restaurants, and some retailers.

With all these monumental disruptions to daily life, people
are increasingly turning to online shopping. Accompanying this uptick in online
activity is an increase in cyber fraud. To learn about the state of cyber fraud
and how social distancing is impacting it, PaymentsJournal sat down with David
Barnhardt, Chief Experience Officer at GIACT, and Raymond Pucci, director of Merchant
Services at Mercator Advisory Group.

During the discussion, Barnhardt and Pucci explained why
fraud is rising and how businesses everywhere should respond.

PaymentsJournalSocial Distancing Has Caused More Online Shopping. And Fraud.PaymentsJournal Social Distancing Has Caused More Online Shopping. And Fraud.PaymentsJournaljQuery(document).ready(function ($){var settings_ap30254603 = { design_skin: "skin-wave" ,autoplay: "off",disable_volume:"default" ,loop:"off" ,cue: "on" ,embedded: "off" ,preload_method:"metadata" ,design_animateplaypause:"off" ,skinwave_dynamicwaves:"off" ,skinwave_enableSpectrum:"off" ,skinwave_enableReflect:"on",settings_backup_type:"full",playfrom:"default",soundcloud_apikey:"" ,skinwave_comments_enable:"off",settings_php_handler:window.ajaxurl,skinwave_wave_mode:"canvas",pcm_data_try_to_generate: "on","pcm_notice": "off","notice_no_media": "on",design_color_bg: "111111",design_color_highlight: "ef6b13",skinwave_wave_mode_canvas_waves_number: "3",skinwave_wave_mode_canvas_waves_padding: "1",skinwave_wave_mode_canvas_reflection_size: "0.25",skinwave_comments_playerid:"30254603",php_retriever:"https://www.paymentsjournal.com/wp-content/plugins/dzs-zoomsounds/soundcloudretriever.php" }; try{ dzsap_init(".ap_idx_85695_4",settings_ap30254603); }catch(err){ console.warn("cannot init player", err); } });

Even before COVID-19,
fraud was going up

One factor that makes the current situation troubling from a
fraud perspective is that fraud levels were already rising prior to the
pandemic. And even if fraud levels had plateaued, they were already high enough
to warrant attention from retailers.

According to recent data,
there are 14.1 million adults in the United States who have been victims of
identity fraud. Additionally, 3.6 million adults have been victims of account
takeover fraud—when a criminal seizes control of a real person’s account— and
this fraud vector cost the economy $4 billion in 2018.

Another worrisome fraud vector is new account fraud. There were
3.2 million victims of this type of fraud and in 2018, new account fraud cost
$3.4 billion, nearly half a billion more than the previous year.

All these data points reflect one thing: “The current state
of fraud is continuing to go up,” said Barnhardt. “And I believe we’re going to
see a far higher than normal amount of fraud attacks” in the near future.

Social distancing is
driving up fraud further: “This is the perfect storm”