The Simility Blog

Back to School Means More Online Fraud Risk
Jayan Tharayil
September 23, 2020

The back-to-school period is always a tense time for parents and their children. Making it more stressful still are online scammers, who will do anything they can to capitalize on busy shopping periods and student loan requirements to generate illicit funds. They’ve done a pretty good job over the years of staying hidden online. This year, COVID-19 has added another element of risk as pupils and their parents spend more time than ever before online, potentially exposing their personal data to fraudsters.

These scams not only hit students and their parents hard in the wallet, they can also end up costing businesses dearly. This is why more firms need tools which enable them to generate a 360-degree view of each customer or loan applicant. With improved visibility, they can begin to regain the initiative.

Back to Fraud

Even before the advent of COVID-19, the latest industry statistics were pointing to an increase in online fraud. In the US alone, associated losses grew 15% from 2018 to 2019, to reach $16.9 billion last year, according to Javelin. Account takeovers (ATOs) in particular are becoming the number one tactic of online fraudsters, with the volume of detected attacks increasing 72% year-on-year. And the bad guys work pretty fast: according to the study, 40% of all fraudulent activity associated with an ATO happens within a day.[i]

Back-to-school usually offers fraudsters an extra opportunity to make money. There are two key threats for businesses in the eCommerce and Financial Services space:

eCommerce: During peak sales periods like back-to-school, scammers often try to sneak through fake transactions or try out stolen account logins, hoping the online retailer will be more focused on driving revenue than spotting fraud. ATOs are particularly hard to spot as purchases made using stored cards from genuine accounts appear legitimate.

Financial: At this time of the year, older students are looking to take out new loans to fund their time at colleges and universities. The risk here is that fraudsters are able to use stolen data to impersonate these individuals: if successfully approved for credit they’ll max out on loans and then disappear. Often synthetic identities are stitched together using some stolen data and other details which are made up. They’re tough for many traditional systems to spot and can end up costing lenders significant sums, as one fraud group could be running parallel scams that cash-out at the same time.

The COVID-19 Factor

This year is set to be unlike any other as many US students are forced to stay home due to the continued threat from COVID-19. But how will this affect fraud? Unfortunately, it’s only likely to offer the bad guys even more opportunities, as users spend more of their time online exposed to phishing emails and scams and making internet purchases.

They’re accompanied, of course, by home workers doing the same as employers continue to advise social distancing. The resulting increase in purchase volumes on eCommerce sites will make it harder for some stores to spot suspicious behavior. On the Financial Services side, while fewer students may need loans to support their living costs (if they’re taking online classes from home), they’ll still be looking for credit to pay tuition fees.

Regaining the initiative

Fortunately, businesses can take steps to insulate themselves from rising fraud levels. Solutions like Simility, a PayPal Service’s Adaptive Decisioning Platform leverage machine learning to continually optimize fraud rules and search for patterns of suspicious behavior that in-house teams would normally miss, especially with huge transaction volumes. The platform uses structured and unstructured data from multiple sources, related to devices, users, transactions, location, and more. Additional data sets can be added at any time to further build out a 360-degree view of each customer.

With this intelligence, businesses are empowered to make confident decisions about transactions, only escalating for additional review if absolutely necessary. This works to help reduce not only fraud/chargeback costs but also the risk of false positives, customer friction and administrative overheads.

This back to school season is at odds with those in years past, but by partnering with a solution like Simility, businesses can help ensure their customers have a seamless experience while keeping fraud at bay.

To learn more about Simility, schedule a demo today.

[i] Javelin Strategy & Research,