E-commerce Grows Double Digits During Hot Sale, Alongside Electronic Fraud Threats

Mexico and the rest of Latin America have experienced unmatched e-commerce growth in recent years, averaging a 30% annual increase during special sales seasons such as Hot Sale. However, online purchases bring new risks for users, forcing buyers and businesses to update their security measures.

The previous edition of Hot Sale (2022) reached total online sales of MXN 23 billion in Mexico, 25% more than the 2021 edition and double the 2019 volume. Broadly speaking, e-commerce growth rates in Latin America have been nearly four times those of North America and Europe in recent years; in Mexico specifically, online sales now represent 13.4% of total retail sales, according to data from the Mexican Association of Online Sales (AMVO).

This growth has not gone unnoticed by cybercriminals, who tend to focus on sectors experiencing accelerated growth and therefore more exposed to the latest threats. In an increasingly digital economy, fraud schemes constantly evolve, and updating security measures becomes essential.

Online transaction fraud is costly for businesses and consumers

In Latin America, the incidence of fraudulent transactions has increased proportionally more than in the rest of the world. According to a recent study by consulting firm America’s Market Intelligence (AMI), 2020 was “the worst year for e-commerce fraud in Latin America,” and they warn that the phenomenon “erodes user trust in e-commerce.”

In the region, losses due to electronic payment fraud are estimated at 4.6% of merchants’ total revenue. That is the highest regional figure in the world, nearly double the 2.4% rate in the United States and Canada. For businesses that fall victim to fraud, a single episode can seriously compromise their financial health immediately.

In Mexico, according to data from the Internet Association (AIMX), 22% of online shoppers were victims of some type of fraud, and 46.5% of them suffered a financial loss during 2022. The figure comes amid a rise in cybersecurity-related crimes in the country, including identity theft and information theft.

Protecting business profits: key technologies for secure transactions

As the Internet Association data shows, transaction security is not only about avoiding financial losses but also about protecting personal information and data about business processes and operations. Even the mere perception of risk can negatively affect a company’s operations, because it contributes to more bureaucracy driven by a lack of trust in processes.

At Clara, we have set out to implement state-of-the-art technology tools to prevent fraud in digital transactions and protect our users’ data. These are the main mechanisms we recommend to all businesses and consumers shopping online during Hot Sale:

• ‘3D’ security: an additional protection barrier activated when making an online purchase. The user is redirected to a new window (‘pop-up’) and asked to confirm the purchase with a code sent directly to their personal email or app.
• Two-step authentication: this lock prevents unauthorized access to payment apps or platforms installed on your phone through a password and a temporary token generated by a third-party system, such as Google Authenticator.
• Virtual cards with dynamic CVVs (security codes): they offer the advantage of processing the transaction without the provided data being usable afterward for other transactions not authorized by the user. The dynamic security code or CVV remains available for a few minutes after the user requests it and changes afterward.
• Infoless cards: traditional credit cards usually contain data such as card number, cardholder name and security code (CVV); however, the new generation of cards without printed information (infoless) reduces the possibility of card data theft, since someone who improperly accesses the plastic cannot transcribe or memorize that data for card-not-present purchases.

Another great tool for consumer security that we have successfully implemented at Clara is decision engines and real-time monitoring tools, managed by a team of fraud prevention specialists available around the clock to ensure users shop safely.

Financial security and data protection for businesses are key to a successful online sales season for companies and the country’s economy. With these essential security mechanisms updated, we invite businesses and consumers to make the most of the Hot Sale season by ensuring they have the most up-to-date security tools for their digital transactions.