Why Holiday Fraud Is Getting Worse

The holiday shopping season is a bonanza for consumers… and fraudsters. Here’s what you need to know to protect your business.

Summary:

• Holiday fraud spikes every year, with networks reporting 85% more blocked attempts on Cyber Monday 2024 vs. 2023. 
• U.S. consumers lost $12.5 billion to fraud in 2024, up 25% from 2023. 
• Fraud isn’t just online as return abuse, BOPIS scams, and account takeovers all climb during the holidays. 
• Simple, immediate actions can protect revenue without frustrating customers; longer-term strategies help defend against organized crime rings.
• Canadian retailers see similar trends: 108,878 reports and $638M in losses in 2024. 

The Holiday Fraud Problem: Why It Spikes

Every October through January, retailers face a predictable but growing challenge: as consumers race for deals, fraudsters race too. There are a few reasons the holidays are so attractive:

• More transactions = more opportunities. High purchase volume hides card-testing and bot attacks. Networks like Visa saw massive spikes in blocked transactions on Black Friday and Cyber Monday.
• Rushed shoppers = easier targets. One-click checkout, guest checkouts, and fast shipping mean fraudsters can slip in with stolen cards or credentials.
• Temporary staff & loosened checks. Seasonal employees may not catch ID mismatches or return abuse as effectively, and fraud rings exploit this gap.
• Fraud across channels. Online card testing often pairs with in-store pickup or refund abuse which makes detection tricky. 
• Automation & AI. Fraud rings increasingly use bots and AI to scale attacks, from phishing to fake storefronts. 

What the Data Shows

E-Commerce and Online Payments

Card-not-present (CNP) fraud continues to dominate online channels. Payment networks report huge spikes in blocked transactions during peak shopping days. At the same time, chargebacks and “friendly fraud” (which is when legitimate-looking purchases are disputed) rise sharply. Some merchant samples show triple the usual fraud volumes on peak days. 

In-Store & BOPIS

Organized retail crime (ORC) rings often move into stores during the holidays, exploiting BOPIS (buy online, pick up in-store) and return processes. Law enforcement reports show arrests spike during late November and December. 

Returns & Refund Abuse

“Refunding” schemes, where fraudsters manipulate return systems to get cash or store credit, intensify after holiday peaks. DOJ cases from 2024–25 show coordinated rings stealing millions via fake returns. 

Account Takeover

Holiday promotions are gold mines for credential-stuffing attacks. FTC Sentinel and identity-theft reports show rising account-takeover incidents during holiday periods. 

Real-Life Case Studies

1) Cyber Monday Card-Testing (2024)

Automated bots tested stolen cards across multiple sites. Visa blocked 85% more suspected fraud than in 2023, saving merchants millions. 

2) Organized “Refunding” Ring (2025)

A DOJ case highlighted a ring that used fake accounts and money-mules to cash out millions in fraudulent refunds. 

3) Canadian Holiday Scams (2024)

CAFC reported 108,878 fraud incidents totaling $638M, including gift-card scams, phishing, and fake storefronts.

How to Protect Your Business

Here’s a practical, ready-to-use checklist for retailers and payments teams:

Immediate (Low Effort)

• Tighten velocity and BIN-range monitoring on peak days.

• Step-up verification for high-value or expedited orders.

• Enforce ID checks for BOPIS pickups.

• Warn customers about phishing scams and fake deals.

Medium (Policy/Process)

• Monitor refund routing in real-time; reconcile unusual transactions.

• Tune ML models and device-fingerprinting for holiday patterns.

• Scale chargeback/dispute response teams with a pre-holiday playbook.

Strategic (Long-Term)

• Share fraud signals across vendors and law enforcement.

• Invest in identity orchestration and tokenized payments.

• Redesign customer flows to reduce PII exposure and friction for legitimate users.

What This Means for Policy and Compliance

• U.S. retailers must meet FTC reporting obligations and cooperate with Sentinel data requests. [2][3]
• Canadian retailers need to track fraud flows and money-mule risks according to CAFC/FINTRAC guidelines.
• Payment networks are tightening dispute evidence rules. Ignoring them risks fines and higher interchange fees. 

Key Takeaways

• Act now for immediate wins: strengthen velocity rules, enforce BOPIS ID checks, and monitor refunds.
• Prepare medium-term systems: enhance fraud detection models, dispute processes, and alerting workflows.
• Invest in long-term defense: identity orchestration, cross-merchant signal sharing, and anti-fraud automation can reduce structural risk.

Sources:

1. Visa — 2025 Global eCommerce Payments & Fraud Report (PDF). Visa Acceptance Solutions & Merchant Risk Council. PDF. Published Apr 4, 2025. Accessed Nov 18, 2025.
   Link: https://www.visaacceptance.com/content/dam/documents/campaign/fraud-report/global-fraud-report-2025.pdf
2. Federal Trade Commission — Press release: "New FTC data show big jump in reported losses to fraud: $12.5 billion in 2024." Mar 10, 2025. Accessed Nov 18, 2025.
   Link: https://www.ftc.gov/news-events/news/press-releases/2025/03/new-ftc-data-show-big-jump-reported-losses-fraud-125-billion-2024
3. Federal Trade Commission — Consumer Sentinel Network Data Book 2024. (FTC data & breakdown). Published 2024; Data book PDF. Accessed Nov 18, 2025. Link: https://www.ftc.gov/system/files/ftc_gov/pdf/csn-annual-data-book-2024.pdf
4. Chargebacks911 — "Chargeback Stats: All the Key Dispute Data Points for 2025" (industry aggregation). Apr 8, 2025. Accessed Nov 18, 2025. Link: https://chargebacks911.com/chargeback-stats/
   
   
5. Canadian Anti-Fraud Centre — Fraud prevention & top-10 frauds (2024 summary). CAFC / antifraudcentre-centreantifraude.ca. (Top 10 frauds & 2024 totals: 108,878 reports; ~$638M). Accessed Nov 18, 2025. Link: https://antifraudcentre-centreantifraude.ca/features-vedette/2025/02/month-prevention-mois-eng.htm
6. Wall Street Journal — "How Scammers Are Using AI This Holiday Season to Steal Your Money." Dec 22, 2024. (Coverage of AI usage and network blocking statistics.) Accessed Nov 18, 2025. Link: https://www.wsj.com/tech/ai/scammers-ai-credit-card-fraud-fbd6f81d 
7. Visa press release — "Visa Helps Holiday Shoppers Stay Secure, Blocking Nearly 85% More Suspected Fraud Globally This Cyber Monday Compared to Last Year." Dec 17, 2024. Accessed Nov 18, 2025. Link: https://usa.visa.com/about-visa/newsroom/press-releases.releaseId.21101.html
8. U.S. Department of Justice — Press release: "Second defendant in organized refunding fraud ring sentenced to 30 months." Feb 6, 2025. Accessed Nov 18, 2025. Link: https://www.justice.gov/usao-wdwa/pr/second-defendant-organized-refunding-fraud-ring-sentenced-30-months-prison
9. Verifi — "Quantifying the Challenge of Friendly Fraud" (whitepaper). (Discusses seasonality and friendly-fraud share). Published 2024/2025. Accessed Nov 18, 2025. Link: https://www.verifi.com/_assets/challenge-friendly-fraud.pdf
10. Chargeback.io / industry sources — "23+ Chargeback Statistics Every Merchant Should Know" (aggregated). Feb 25, 2025. Accessed Nov 18, 2025. Link: https://www.chargeback.io/blog/chargeback-statistics
11. Reuters — "Visa prevented $40 bln worth of fraudulent transactions in 2023." Jul 23, 2024. (Context on network blocking scale.) Accessed Nov 18, 2025. Link: https://www.reuters.com/technology/cybersecurity/visa-prevented-40-bln-worth-fraudulent-transactions-2023-official-2024-07-23/