It comes as no surprise that e-commerce sales, as a percentage of total sales, are up nearly 300% in the last decade.

With COVID-19 safety precautions making in-person shopping less palatable to consumers, it’s a safe bet that this holiday season will be busier than ever for e-commerce retailers.

What’s more, with major shipping companies operating at full capacity, many retail organizations are rushing to extend the holiday shopping season into early fall. For instance, Amazon recently held its “Prime Day” sales event with an estimated $10 billion in sales.

The 2020-2021 holiday sales season is expected to grow between 1% and 1.5% over 2019, with over $1 trillion spent. A greater shift to online sales and payments and an extended shopping season makes this year, more than most, a perfect candidate for holiday fraud trends.

Outlook for 2020’s online shopping season

According to a recent survey, approximately 75% of shoppers stated they will begin shopping earlier this year, and 64% plan to spend more online. With over $600 billion projected to be spent online this year, your organization will need to be hypervigilant to prevent fraudulent activity. Not long ago, online retailers had to contend only with credit card fraud, but now gift cards, PayPal, Venmo and mobile payment applications are all factors.

Online payment fraud exists in many forms

  • Phishing. While many phishing emails are obvious attempts at fraud, the cost-to-benefit ratio invites criminals to continue trying. Victims will often purchase gift cards or provide payment information that can then be used for purchases.
  • P2P. Person-to-person payment applications such as Zelle and Venmo can be targets of email phishing, SMS or text-based phishing, and spoofed websites.
  • E-commerce sites. It’s a common tactic for criminals to create duplicate websites with similar URLs to lure victims into paying for purchases they’ll never receive.
  • Gift card fraud. Gift cards are untraceable, which makes them a prime target for criminals.

How can my business be affected by holiday fraud trends?

Your business may occupy a relatively small footprint on the internet, enough that you don’t consider yourself a “high value” target. The reality is more complex and frightening:

  • Automation. Many sites can be compromised, regardless of size, due to automation. “Google dorking” allows specific search queries to be run that can find even the smallest sites.
  • Organized crime. While it is certainly possible for payment card fraud to be committed by an individual, the greatest impact comes from crime syndicates that operate internationally. For instance, these gangs will have expensive items shipped to known vacant addresses. When the victim disputes the charge, the item is long gone, but the merchant suffers serious losses.
  • Payment processor breaches. Many small businesses partner with third-party payment processors. Recently, Shopify experienced an insider attack that resulted in data from merchants being compromised. This data could be used for fraudulent payments to other vendors.

Holiday fraud trends can affect your business in many ways. The loss of reputation if your business becomes known as a haven for illegal payments or data breaches can quickly result in lost sales.

For example, chargebacks are projected to rise 20% from the previous year. Chargebacks from credit card issuers can have a dramatic impact on your business. First, you must process your appeal within a timeline dictated by the issuer. If it’s denied, you could be charged the amount of the purchase plus a fee that varies from $20 to $100 and that does not account for your lost time and productivity.

It’s estimated that up to 40% of reported credit card fraud is considered “friendly,” which means the fraudster is the actual cardholder and they are attempting to get a refund while keeping the item.

What can I do to protect my business?

With the average American spending $1,800 per year online and an estimated 300 million online shoppers just in America by 2023, you can see that the opportunity for growing your business is excellent, especially during the holiday season. But that also means holiday fraud trends will appear.

Engage a partner that is an industry-leading expert in fraud prevention.’s innovative and proprietary fraud prevention solution will allow you to sleep well at night.

  • Our Identity Services verify in real time that when a customer pays for an item, they are who they say they are.
  • We leverage anonymous metadata from payment processors, merchants and other partners about verified bad actors to develop a fingerprint that can be spotted before the transaction is finished processing.
  • Our deep learning tools analyze billions of transactions and develop models that aid in identifying not only potentially fraudulent payments but also groups of criminals that are attempting these payments.

Download’s FREE eBook, a comprehensive guide to creating the best holiday shopping experience for customers, while also protecting your organization from fraudsters.