October 27, 2016
U.S. merchants on the lookout for card-not-present fraud should be most suspicious of orders with billing and shipping addresses in the Southeast and Mid-Atlantic states, according to an analysis by Sift Science. The Silicon Valley antifraud technology provider examined more than 1.3 million transactions from August 2015 to August 2016 and broke down the results by city and by state. The billing address on a fraudulent order is often part of an identity stolen from a fraud victim and the shipping address often represents the location of the fraudster. Sift Science analyzed fraudulent orders and those two pieces of information to find the locations where most people are defrauded and from where most fraud originates.
Alaska tops the list of states where the highest percentage of people have had their credit card information used fraudulently—23.4 percent of all transactions with an Alaska billing addresses are flagged as fraud—but the total number of transactions is low. Delaware (19.2 percent) and New York (15.2 percent) place second and eighth, but the rest of the top 10 is dominated by SEC country: Mississippi, Louisiana, Arkansas, Alabama and Kentucky round out most of the top 10. By city, New York is the worst place for billing addresses associated with fraudulent orders. New York City boroughs the Bronx (21.5 percent) and Brooklyn (16.9 percent) come in with the first- and third-highest billing-address fraud rates. And, while Florida ranks only 12th on the state list, Miami (17.8 percent), Orlando (12.6 percent), Jacksonville (12.4 percent) and Tampa (12.3 percent) all make the top ten list of cities with the highest fraud rates in terms of billing addresses. Sift acknowledged in its report that the fraud rates it found looked high.
“But one thing to keep in mind is how fraudsters work,” the company said in blog post reporting the results. “We’ve seen networks of fraudsters (fraud rings) cluster in small geographical areas. We’ve also seen single fraudsters attack multiple sites—multiple times—using the same stolen credit card information. In other words, a small number of fraudsters could be responsible for a large, concentrated volume of bad transactions. That’s why pooling data from across a large and diverse network is key to successfully stopping fraud.”
The map of shipping addresses associated with fraudulent orders looks similar: Delaware and New York from the northeast, and the southeastern states comprising the rest of the top 10. From a metropolitan perspective, the story with shipping addresses on fraudulent orders is virtually identical to billing addresses. The Bronx, Miami and Brooklyn top the list with several more Florida cities among the top havens for fraudsters.