EMV-chip enabled card.

In its most recent assessment report of fraud done in partnership with the Merchant Risk Council, Forter analysts found an increase in U.S. online fraud due to criminals shifting to the Internet amid the rollout of microchip embedded credit cards.

And in regard to the most impacted segments, fraud attacks are skyrocketing in the apparel sector.

In its 2016 Fraud Attack Index report, fraud prevention solution provider Forter noted that there was also a “79 percent increase in risk of fraud for domestic holiday orders” (on a year-over-year basis) for the 2016 season. Risk of fraud is an index that measures exposure to fraud attacks. For the year, actual online fraud attacks showed an 8.9 percent gain.

Researchers at Forter said in the report that they were not surprised by an increase in attacks online since the Oct. 2015 adoption of microchip-embedded cards. “Since domestic U.S. fraudsters were most adversely affected by not being able to copy physical cards as easily, it makes sense that these criminals have shifted online, boosting domestic CNP (card not present) fraud,” the firm noted.

On the international front, Forter said the fraud attack rate fell by 13 percent year-over-year, which the firm said was “a surprise since international orders are well-known to carry higher risk.”

“Forter’s researchers attribute this decrease to a growth in genuine international orders rather than a decrease in fraud, however, and this may parallel the increasing value many merchants are seeing in the international market,” the analysts said in their report.

By vertical segment, fraud attacks declined in the luxury market by 8.4 percent, and in electronics, fell 1.8 percent. In the digital goods segment, fraud fell 22.6 percent and 33 percent in the hospitality industry. In the food and beverage segment, fraud attacks rose nearly 50 percent while in apparel it increased 69.9 percent.

Michael Reitblat, chief executive officer of Forter, said the gain in the apparel segment “may be related to the new fraudsters who’ve joined the online criminal community following EMV [microchip] adoption in the U.S. and are perhaps sticking to a vertical they understand. It may also reflect the increased comfort of genuine shoppers with the idea of buying fashion items online and returning as necessary.”

Researchers also noted that the “‘tsunami’ of fraud attempts that many merchants experienced at the end of 2015 was not repeated, but the moderate rate of increase was sustained — and since this increase added to the spike of 2015.”

“It is safe to say that the risk of fraud is still a serious concern for online retailers today,” they added.

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