LAS VEGAS -- Payments fraud follows patterns. Study it enough and they aren’t difficult to see. However, one area that tends to get overlooked is how fraud can vary by geographical region.
Signifyd, a fraud protection provider for e-commerce companies, is developing a quarterly, global fraud index with PYMNTS that provides detailed transaction data on fraud activity by industry and fraud type. But perhaps the most interesting data point Signifyd discovered as it was developing this tool is how significantly fraud can vary by region.
“There’s very little holistic commentary of what is going on as far as fraud, country to country,” said Sourabh Kothari, director of advocacy brand content for Signifyd. “It’s worth explaining to people why France is in the top 10 fraud countries for e-commerce almost every quarter. No one thinks about it.”
But why is e-commerce fraud in France so high? According to Kothari, it’s because of the nature of customers spending habits in the country itself. “It’s not a bad place to do fraud in Europe,” he said. “By comparison, in Germany, [e-commerce fraud] is irrelevant because Germany is a cash and debit card-driven nation. They don’t spend money they don’t have. It sounds really simple, but it’s true.”
Skye Spear, vice president of partnerships for Signifyd, elaborated. “They don’t do a lot of transactions with credit cards. For a very well-developed, very advanced country, they prefer things like bank transfers and cash on delivery. They don’t spend money they don’t have,” he said. France and the UK, in contrast, are very much more aligned with American spending habits.
But that doesn’t mean that the entirety of the United States is unified in how its consumers spend. Signifyd has observed substantially differing fraud patterns related to consumer spending habits in different regions of the U.S.
“You see certain fraud patterns in certain states,” Kothari said. “When you see it, you think, ‘That’s interesting.’ But when you do a deep dive, you realize it’s probably something you’ve probably always assumed about a particular region. It’s like, ‘I’ve always thought that; I’ve just never said it. But now the data is telling me that in Texas, there’s a lot more fraud around alcohol and tobacco products.’ So that’s our goal—to give those patterns a true explanation with real data.”
Getting state-to-state data was Signifyd’s primary goal here, even more so than getting data on countries. “While countries are interesting, for a lot of merchants, they’re not as relevant as states,” Kothari said. “And if you rank states, it’s not going to be that interesting because you’ll always have California and New York in the top two. But it’s the third, fourth, fifth, etc. where it gets interesting. Texas comes in. Florida comes in. Sometimes Illinois comes in.”
Signifyd’s forthcoming fraud index, though comprised of data collected from online retailers, will be available to everyone. It is slated to launch next month. The first index will be fairly general, but future editions are expected to do deeper dives into industries and regions where fraud is occurring, Kothari explained. “Every industry, every country, and every state has a story,” he said.