Fraud During the Holiday Season

As the holiday season approaches, it’s not just the Christmas lights that are twinkling – so are the fraudsters' eyes. At Futurum Risk, we’ve been keeping a close eye on customer data to understand how fraud evolves during the busiest shopping season of the year. The trends are clear: with an uptick in consumer activity, fraud surges, becoming more sophisticated and harder to detect. For businesses gearing up for the holiday rush, this isn’t just another season to deck the halls – it's the time to double down on fraud prevention. So, let’s take a closer look at what you can expect, and how Futurum Risk can help you stay ahead of the game.

Key Drivers of Increased Fraud

While the holiday season is a time for joy and giving, it’s also a prime opportunity for fraudsters to thrive. The holiday traffic surge — the sharp rise in online transactions — gives cybercriminals a wider pool of targets to exploit. With more transactions and activity happening online, fraudsters are ramping up their tactics. For instance, the use of VPNs and proxy servers peaked during the festive season, with VPN usage hitting 5.02% on December 18, a 50% increase over the average season. Fraudsters, now armed with privacy tools, can easily mask their identity, making them more difficult to trace.

Automation is another major player in the rise of fraud. The steady increase of bot-driven fraud from 0.11% in early November to a holiday season high of 0.49% in December shows how technology is being leveraged by criminals to infiltrate high-transaction sectors like e-commerce and financial services. These bots can generate fake accounts, make fraudulent transactions, and bypass security measures in a way that humans simply can't match.

Fraud Peaks by Industry & Activity

Not all fraud is created equal — certain industries and activities are particularly vulnerable. During the 2023 holiday season, iGaming and payment gateway sectors were hotspots for fraudulent activity. iGaming, in particular, topped 14% fraud activity on multiple occasions, making it a prime target for cybercriminals. Activities such as account creation, transactions, and subscription services saw a sharp increase in fraudulent activity, with subscription fraud hitting its peak in December.

Interestingly, the highest levels of fraud weren't spread out evenly. Fraud activity surged most during specific days, with December 25th emerging as the day with the highest overall fraudulent activity. This could be because fraudsters, knowing that consumers are distracted by the holidays and less vigilant, take advantage of the situation. Furthermore, the week of December 18–24 was when fraud reached its highest levels across industries, underscoring the need for proactive, heightened vigilance during this critical period.

The Role of Privacy Tools in Facilitating Fraud

The rise in VPNs, proxies, and suspicious browsers is a growing concern for fraud detection. Privacy tools average 1.78% of activity during the season, but certain days, particularly during peak shopping hours, see noticeable spikes. Fraudsters use these tools strategically to disguise their online footprint, increasing the likelihood of successful fraud attempts. For businesses, monitoring for such tools is key to uncovering vulnerabilities and thwarting fraud before it can escalate. Futurum Risk offers sophisticated monitoring solutions that can detect these anomalies and provide early warnings, helping businesses mitigate risk in real-time.

Preparing for 2025: Lessons from the 2024 Holiday Season

Looking ahead to 2025, businesses can gain valuable insights from last year’s trends. The holiday season will continue to be a high-risk period, with fraud surging in tandem with consumer spending. Here are a few key lessons that Futurum Risk encourages businesses to take on board:

1. Expect the Seasonal Spike: Fraud is cyclical and spikes with consumer activity. Businesses need to be ready for the increased volume of transactions and the corresponding surge in fraud.
2. Automate Fraud Prevention: The rise of bots means that automated fraud detection systems are no longer optional – they are essential. Advanced machine learning models can identify suspicious activities and stop fraud in its tracks.
3. Monitor Privacy Tools: Fraudsters’ use of VPNs, proxies, and suspicious browsers to conceal their identity is becoming more sophisticated. Proactively identifying and monitoring these behaviours can help prevent potential fraud before it becomes a major problem.

Top Holiday Scams to Watch Out For

In addition to the broader trends, it’s crucial for both consumers and businesses to be aware of specific scams that come with the holiday territory. Fraudsters are creative, and they know how to exploit the festive spirit to trick even the most vigilant among us.

• Fake Deals and Discounted Products: Who can resist an unbelievable offer on the latest gadgets or fashion? Unfortunately, these too-good-to-be-true deals often lead to fake websites designed to steal payment information.
• Gift Card Fraud: Whether it's scammers selling fake gift cards or demanding gift card payments for a non-existent deal, this old scam is still alive and well.
• Charity Scams: The season of giving is prime time for scammers impersonating legitimate charities.
• Holiday Job Offers: Fraudulent seasonal job ads often mask the real agenda of moving stolen goods or laundering money through unsuspecting employees.
• Travel Scams: Fraudsters prey on last-minute travellers with fake travel deals or phishing emails from seemingly legitimate airlines or agencies.

How Businesses Can Protect Themselves and Their Customers

At Futurum Risk, we understand the importance of protecting your business and customers during the holiday season. It’s all about being proactive, staying informed, and using the latest fraud prevention technologies. Automated systems, like AI-powered fraud detection and behavioural analytics, can help you stay one step ahead of the fraudsters. And with the holiday season’s rapid approach, it's crucial to implement strategies now to prevent costly and potentially reputation-damaging fraud later.

In the festive rush, it’s easy to get caught up in the excitement – but fraudsters thrive when we let our guard down. By partnering with experts like Futurum Risk, businesses can make sure that this holiday season is merry, bright, and fraud-free.