It’s an exciting time to be in the event ticket industry. In the US alone, online retail sales are expected to reach $334 billion this year, and will continue growing. Online event ticket sales, meanwhile, are projected to grow at an average annual rate of 3.1% between now and 2019.
Riskified has been fortunate to work with some great ticketing merchants, including viagogo and Ticket Evolution, and has been helping them drive ticket sales while avoiding CNP fraud. Today, we published a report about fraud in the ticketing industry, based on data we compiled in the process of our work.
The following post includes a small taste of the insights and data included in our report about CNP fraud in the ticketing industry.
The Time for Merchants to Adapt to Digital Ticket Sales is Now
As more people choose to purchase event tickets online, consumer preferences are also shifting towards digital tickets. As with all digital goods, consumers expect near-instant turnaround times when it comes to e-tickets, making reliance on manual fraud review problematic.
Unfortunately, it’s not only legitimate customers who prefer e-tickets to paper tickets. In fact, Riskified data from the US market shows that fraud rates are nearly twice as high in digital tickets than in physical tickets. Ticketing merchants have their work cut out for them – they must accurately detect and prevent fraud within seconds.
Given the high rate of fraud in digital tickets and the challenging circumstances of reviewing these orders for fraud, we decided to focus mostly on analyzing fraud patterns in digital ticket sales. In the report, we set out to answer various questions with the help of data, such as ‘What is the correlation between the rate of fraud and the amount of tickets purchased in a single order?” and “Which sporting events and music concerts do fraudsters tend to target?”. Below are a couple of examples of the correlations we found within the data.
Higher Priced Tickets Carry a Higher Risk of Fraud
Across verticals, fraudsters target more expensive items – in order to enjoy higher profits when reselling the goods. As a first step to analyzing fraud patterns in digital ticket sales, we sought to understand the extent to which fraud is correlated with prices when it comes to e-tickets.
Our data from the US market shows that higher prices are strongly correlated with higher fraud rates in digital tickets. In other words, the percent of fraud (including both fraud-related chargebacks and orders declined due to fraud) is higher in more expensive tickets:
The rate of fraud in tickets sold for a price of $51-$115 is 3.08% – nearly three times higher than in tickets sold for a price of $50 or less. In tickets sold at a price of over $200 a piece, more than 20% of orders were fraudulent. While merchants naturally aim to avoid incurring costly chargebacks, it’s important to remember that the losses associated with falsely declining transactions are sizeable.
Fraudsters Tend to Purchase Tickets 1-3 Days Before an Event
Analyzing data from the US market also provided us with insights into fraudster behavior and methods of operation For example, the timeframe between the ticket purchase and the event itself is a data point which is unique to the events ticketing vertical. We analyzed our data to see whether there is a correlation between the timing of the ticket purchase and the rate of fraud.
In other words, we were interested to know how far in advance before an event do fraudsters typically try to purchase tickets to said event? Our data from US digital tickets sales shows that tickets purchased a month or more before an event hold the lowest risk of fraud. As the event comes closer, fraud rates increase. The highest rate of fraud, according to the data, is in tickets purchased 1-3 days before the event is scheduled to be held:
As is illustrated above, while fraud rates rise steadily as the event draws near, the rate of fraud in tickets purchased on the day of the event is slightly lower than in tickets purchased 1-3 days prior to the event. This is most likely due to the window of time necessary to resell stolen tickets. Fraudsters may be reluctant to buy tickets on the day of an event, since they need time to sell them to a third party. Another possible explanation is that demand for tickets drops off the day of an event, as most people who want to attend a concert or sporting event make their plans at least one day in advance.
Get Your Copy of The Report
This was just a small taste of the data included in our report on CNP fraud in the ticketing industry. Some of the patterns we identify confirm what many ticketing merchants already know, while other patterns may be different across merchants. To get a free copy of the full report, click here.
Data is at the heart of Riskified’s approach to fraud prevention, and we highly recommend that all merchants looking to prevent fraud and to avoid false declines spend time analyzing their own data to identify the patterns unique to their business.
We love talking about fraud prevention. If you have any questions or want additional information about how Riskified can help you combat fraud while driving sales, contact us.
Riskified will be attending the upcoming International Ticketing Association (INTIX) 2016 conference in Anaheim, California! Come meet us at booth #819 and learn how our eCommerce fraud management solution is already allowing hundreds of brands to eliminate chargebacks and increase approval rates. If you’d like to book a meeting in advance, please contact email@example.com. We’re looking forward to meeting you!