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Jewelry Sector a ‘Favorite for Fraudsters’ Online

Online scams in the industry increased 13% over the past year, says report.
Jun 26, 2017 10:04 AM   By Rapaport News
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RAPAPORT... E-commerce fraud increased 13% in the jewelry industry over the past year, according to a recent report by fraud-protection company Signifyd.

Fraudulent payments accounted for 13.3% of online jewelry transactions during the first quarter of 2017 in terms of dollar sales, the company said in its Global Fraud Index for May. This compared with 11.8% during the same period in 2016, making the jewelry and precious-metals industry one of the few sectors in which the rate of scams increased over the past year. In contrast, total e-commerce fraud fell 35% in the first quarter, accounting for 3.6% of online transactions.

The jewelry and precious-metals sector is a “favorite for fraudsters,” Signifyd said. The average chargeback in the industry — the amount a retailer pays to cover a customer’s loss from a fraudulent transaction — stood at $1,970 for orders above $500, the highest of any sector.

While jewelers tend to rely heavily on blacklisting as a way of keeping scammers at bay, criminals simply find ways to dodge these restrictions, according to the report. In fact, since the rate of fraudsters taking over customers’ accounts is 10 times higher in jewelry than the average, blacklisting often leads to the rejection of legitimate customers once they regain control of their hacked accounts, Signifyd pointed out.

In addition, because there is strong competition in the industry for high-value clients, merchants are reluctant to share information about their customers and transactions, which hampers their ability to use advanced fraud-protection tools, the company explained.

Another reason fraud is rampant in the sector is the resale value of these commodities, the report said.

“Jewelry and precious metals are still seen as viable alternatives to currencies and financial investments in turbulent markets, which means demand remains high,” it explained. “Fraudsters are easily able to resell stolen goods and are assured of a global marketplace for such goods.”
Tags: ecommerce, fraud, Global Fraud Index, Jewelry, Online fraud, Rapaport News, Signifyd, US
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