Fun Lovin’ Criminals: Avoiding Costly CNP Fraud in Event Ticket Sales

For years, online retail has been providing convenience and value for customers purchasing both physical merchandise and digital goods. The same goes for online ticket sales to festivals, concerts, sporting events and so on – buying tickets with a click has long been the smarter alternative to those endless lines at the ticket booths.

Event online ticket purchasing CNP fraud prevention

People looking for some good entertainment aren’t the only ones taking advantage of this convenience, though. Fraudsters are drawn to online ticket purchasing for many of the same reasons that they’ve utilized other segments of ecommerce to turn stolen credit card information into cash: the web’s ability to mask the true identity of the purchaser, the short time required to purchase, the large availability of secondary markets for selling the merchandise, and the very large profit margin due to low costs incurred by the fraudster.

To try and handle this challenge, online ticket sellers often turn to overly strict fraud filters in order to decrease the number of successful fraudulent orders and thereby decrease their losses due to costly chargebacks. By using a solution which is more strict than savvy, more imprecise than intelligent, these merchants end up turning down many legitimate orders, needlessly cutting into their revenue and alienating certain customers from their company, perhaps forever. When it comes to online ticket sales, that customer alienation is especially damaging since event tickets are a commodity market – people have many other ways to buy their tickets, leaving no reason to return to a frustrating vendor.

First time customers and online orders originating on mobile are also falsely declined in high numbers due to lack of legitimate customer history for the former and the challenges of using traditional fraud filtering methods (such as IP address matching) for the latter.

Ecommerce fraud prevention vendor Riskified recently released a report detailing the specific patterns of card not present (CNP) fraud in this vertical. The company’s platform leverages machine learning to discover and then use these patterns to accurately screen out fraudulent online orders while at the same time significantly decreasing falsely declined orders.


The insights which emerge from their fraud rate data show some interesting patterns in fraudsters’ tactics.

Last minute orders are more likely to be fraudulent

One of the most illuminating findings is that online ticket orders made well in advance of the event can usually be safely approved. In fact, the approval rate for ticket orders placed 60 days in advance is 96.2%. Even more interesting is that this approval rate decreases as the order data gets closer to the event date. For orders placed the day of the event, the approval rate drops to 93%.

There are many reasons why orders placed long in advance are more likely to be legitimate: people intent on actually going to the event would want to get the specific seats they want before those are gone, leaving them potentially priced out of the event. Fraudsters don’t have much incentive to buy early, since – as every scalper knows – the supply is lowest and the demand for tickets is highest on the day of or just before the event. So, for maximum profit the fraudster would want to resell the tickets very close to the event day, but buying way in advance means that the fraudster faces a long delay between placing the fraudulent order and receiving their profit, which runs counter to their main goal of making a quick buck.

Fraudsters have expensive tastes

Similarly, the Riskified data show that the fraud rate increases with order value. Orders of less than $200 have a very high approval rate, 96%. For orders greater than $1000, however that rate drops to 81%. Since fraudsters can max out any card they have the information for, they often make the highest value purchase they can, since almost all their revenue is pure profit and a single high value purchase is quicker than placing many smaller value orders.

Anonymous in Coachella
photo credit: Thomas Hawk / Flickr

…And they prefer Coachella to the Colts

A somewhat surprising finding is the fact that the incidence of fraudulent orders is not the same across all categories of events. For example, the approval rate for music festival tickets is 78%, which means that nearly one quarter of those online orders are fraudulent. Sporting events, on the other hand, have an approval rate of 95%. Obviously, fraudsters target music festival tickets more than sports tickets, as the difference between the two is 18%.

Could it be that the younger crowds who are more likely to attend those festivals are much more likely to scour the secondary markets on which the fraudsters resell their stolen goods?

Finding patterns and making predictions

Regardless of the economic motivations driving the tactics of fraudsters, it’s clear that there are patterns in their behavior which can allow online ticket vendors to better screen purchases and therefore avoid chargebacks which cut deeply into profits, and indirectly funding criminals.

Intelligent fraud prevention solutions allows online ticket sellers to increase their revenue and slash their losses due to online fraud.