Before the pandemic, buying clothes online was not that common. People were afraid that they would not like the garments and that they would not be able to return them; however, that has changed and the fashion category is one of the most sought after, even by fraudsters who want to take advantage of its success.
According to data from the Mexican Association of Online Sales (AMVO), this category was positioned as the most sold in the last Hot Sale, as it represented 39% of total sales during the campaign.
However, its ease of resale makes it a very attractive category for generating fraud, , CEO of fraud prevention company ClearSale, especially when it comes to limited-edition items such as sneakers or handbags.
These campaigns, which also include Hot Fashion, are very complex times for businesses, says Christian León, director of the Signifyd business protection platform in Latam, since the teams focused on anti-fraud solutions are overwhelmed by the amount of orders.
According to the most recent AMVO report, approximately six out of 10 buyers plan to purchase a product this season, which increases the pressure of fraud. Figures from Signifyd report that fashion is one of the segments in which this problem has increased the most, since from January 2021 to the same month of 2022, fraud attempts grew 127%.
The three dynamics of fashion fraud
The specialist highlights that three main ways to defraud fashion businesses have been detected. One of them is account takeover , that is, when the fraudster gains control of the account of an experienced buyer to take advantage of their payment methods and good reputation.
Another case is triangulation . It is when the fraudster uses the data of a stolen card to purchase discounted products from an official store of a recognized brand and creates a false profile on an open online trading platform or marketplace to resell them, pretending to be the brand.
The third example is the option to buy online and pick up in store , in which products are purchased with a stolen card and the process of collecting the product is done too quickly. With this sales method, businesses do not have the delivery address variable, which is a point of analysis to determine the user’s reputation, based on other deliveries that have been made.
The impact of fraud on customers
Fraud, León points out, has an impact in different areas. First, legitimate customers are affected by finding discounted products out of stock due to reselling. Brands see their trust diminished by third parties impersonating them, while retailers can be victims of chargebacks when the legal owner of the method tells them that they do not recognize the charges on their card.
It highlights that other effects and costs must be considered around the products that are lost due to fraud , such as storage or transfer, while when sales are not approved to avoid fraud, they are also losing marketing and advertising of the product.
Faced with this type of campaign, he says, businesses must be prepared based on clear metrics about the fraud they suffer and how many purchases they decline. “It’s about more depth of analysis in the information to find the problem and determine a solution that can help you solve it in an automated way to put aside manual reviews, which hinder sales.”
