Increased fraud in online fashion

The growing ecommerce has led to a rise in most types of fraud, online fashion retailers claim. One in three have experienced more online payment fraud, while 44 percent have experiences a rise in account takeover and promotion abuse.

The coronavirus outbreak has led to a boost in ecommerce. But this in turn has led to a rise in almost all types of fraud in the online fashion industry.

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

Fraud rates are higher than among other retailers

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

More consumers are ‘wardrobing’.

“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 ecommerce and are handling extremely high volumes of transactions online, while also trying to fulfil a growing number of online deliveries.”

‘Retailers now have to mitigate the threat of fraud’

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 fewer. The bright side is that three quarters are now expecting to increase their fraud team size and budgets.